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Exam 9: Flexible Budgets and Performance Analysis

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Question 141

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Hatzenbuhler Manufacturing Corporation has prepared the following overhead budget for next month. The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 6, 600 machine-hours rather than 6, 800 machine-hours?

A) $107, 824.00
B) $110, 600.00
C) $108, 300.00
D) $107, 347.06

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Question 142

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Cicchetti Corporation uses customers served as its measure of activity.The following report compares the planning budget to the actual operating results for the month of December: Required: Prepare the company's flexible budget performance report for December.Label each variance as favorable (F)or unfavorable (U).

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Question 143

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Stitt Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During November, the company budgeted for 5, 900 units, but its actual level of activity was 5, 880 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for November: Data used in budgeting: Actual results for November: The spending variance for manufacturing overhead in November would be closest to:

Chirico Clinic uses client-visits as its measure of activity.During February, the clinic budgeted for 2, 500 client-visits, but its actual level of activity was 2, 550 client-visits.The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for February: Data used in budgeting: Actual results for February: The personnel expenses in the planning budget for February would be closest to:

Mulberry Clinic uses patient-visits as its measure of activity.The clinic bases its budgets on the following information: Revenue should be $48.70 per patient-visit.Personnel expenses should be $27, 600 per month plus $14.70 per patient-visit.Medical supplies should be $1, 000 per month plus $10.10 per patient-visit.Occupancy expenses should be $9, 500 per month plus $2.40 per patient-visit.Administrative expenses should be $3, 800 per month plus $0.10 per patient-visit. The clinic reported the following actual results for August: Required: Prepare a report showing the clinic's revenue and spending variances for August.Label each variance as favorable (F)or unfavorable (U).

Gilson Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During April, the company budgeted for 5, 100 units, but its actual level of activity was 5, 060 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for April: Data used in budgeting: Actual results for April: The revenue variance for April would be closest to:

A flexible budget should not be used when making comparisons to actual results such as actual expenses.

Shingler Corporation bases its budgets on the activity measure customers served.During May, the company planned to serve 39, 000 customers.The company has provided the following data concerning the formulas it uses in its budgeting: The company has also furnished its income statement for May: Required: Prepare a report showing the company's activity variances for May.Indicate in each case whether the variance is favorable (F)or unfavorable (U).

Gershon Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports.The cost formula for plane operating costs is $38, 720 per month plus $2, 061 per flight plus $9 per passenger.The company expected its activity in June to be 76 flights and 238 passengers, but the actual activity was 75 flights and 239 passengers.The actual cost for plane operating costs in June was $196, 310.The spending variance for plane operating costs in June would be closest to:

Fortmann Kennel uses tenant-days as its measure of activity;an animal housed in the kennel for one day is counted as one tenant-day.During September, the kennel budgeted for 2, 000 tenant-days, but its actual level of activity was 2, 010 tenant-days.The kennel has provided the following data concerning the formulas to be used in its budgeting: The activity variance for wages and salaries in September would be closest to:

Fixed costs should be ignored when evaluating how well a manager has controlled costs.

Directly comparing a static planning budget to actual costs helps to distinguish between differences in costs that are due to changes in activity and differences that are due to how well costs were controlled.

A planning budget is prepared before the period begins and is valid for whatever the actual level of activity turns out to be.

Akey Hospital bases its budgets on patient-visits.The hospital's static budget for March appears below: The total overhead cost at an activity level of 3, 000 patient-visits per month should be:

Linscott Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During July, the company budgeted for 5, 400 units, but its actual level of activity was 5, 380 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Actual results for July: The spending variance for direct materials in July would be closest to:

Coderre Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During July, the company budgeted for 7, 800 units, but its actual level of activity was 7, 780 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Actual results for July: The activity variance for direct labor in July would be closest to:

Shelby Boat Wash's cost formula for its cleaning equipment and supplies is $2, 200 per month plus $34 per boat.For the month of September, the company planned for activity of 82 boats, but the actual level of activity was 32 boats.The actual cleaning equipment and supplies for the month was $3, 340. The spending variance for cleaning equipment and supplies in September would be closest to:

Coderre Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During July, the company budgeted for 7, 800 units, but its actual level of activity was 7, 780 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Actual results for July: The direct materials in the flexible budget for July would be closest to:

Comparing actual results to a budget based on the actual activity for the period is possible with the use of a:

Tabeling Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During August, the company budgeted for 6, 500 units, but its actual level of activity was 6, 540 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for August: Data used in budgeting: Actual results for August: The activity variance for net operating income in August would be closest to: