1.
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Roye 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, Kennel budgeted for 4,700 tenant days, but its actual level of activity was 4,780 tenant days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for September:
|
Data used in budgeting:
|
Fixed element
per month |
Variable element pertenant day |
| Revenue |
” |
$35.20 |
|
|
|
| Wages and salaries |
$3,600 |
$8.60 |
| Expendables |
1,100 |
15.10 |
| Facility expenses |
7,500 |
4.10 |
| Administrative expenses |
7,600 |
0.50 |
| Total expenses |
$19,800
|
$28.30
|
Actual results for September:
| Revenue |
$144,230 |
|
|
| Wages and salaries |
$28,660 |
| Expendables |
$74,070 |
| Facility expenses |
$27,220 |
| Administrative expenses |
$7,106 |
1. The spending variance for expendables in September would be closest to:
|
$2,000 F |
|
$792 F |
|
$2,000 U |
|
$792 U
|
The manufacturing overhead budget at Mahapatra Corporation is based on budgeted direct labor hours. The direct labor budget indicates that 9,800 direct labor hours will be required in May. The variable overhead rate is $8.20 per direct labor hour. The company’s budgeted fixed manufacturing overhead is $141,120 per month, which includes depreciation of $18,130. All other fixed manufacturing overhead costs represent current cash flows.
|
|
2. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
|
|
$203,350 |
|
$221,480 |
|
$80,360 |
|
$122,990
|
3. Thomasson 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 $36,100 per month plus $2,030 per flight plus $1 per passenger. The company expected its activity in April to be 70 flights and 220 passengers, but the actual activity was 69 flights and 225 passengers. The actual cost for plane operating costs in April was $175,010. The activity variance for plane operating costs in April would be closest to:
|
|
$3,410 F |
|
$2,025 U |
|
$2,025 F |
|
$3,410 U
|
Gourley Clinic uses client visits as its measure of activity. During August, the clinic budgeted for 3,650 client visits, but its actual level of activity was 3,590 client visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:
|
|
Fixed element per month |
Variable element per client visit |
| Revenue |
” |
$39.90 |
|
|
|
| Personnel expenses |
$35,900 |
$11.10 |
| Medical supplies |
1,900 |
7.90 |
| Occupancy expenses |
8,900 |
1.90 |
| Administrative expenses |
5,900 |
0.1 |
| Total expenses |
$52,600
|
$21.00
|
4. The activity variance for administrative expenses in August would be closest to:
|
|
|
