63) Groupe 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 $48,840 per month
plus $2,381 per flight plus $7 per passenger. The company expected its activity in October to be 63
flights and 293 passengers, but the actual activity was 61 flights and 298 passengers. The actual
cost for plane operating costs in October was $199,070. The activity variance for plane operating
costs in October would be closest to:
A) $1,824 F
B) $1,824 U
C) $4,727 U
D) $4,727 F
64) Kirnon Catering uses two measures of activity, jobs and meals, in the cost formulas in its
budgets and performance reports. The cost formula for catering supplies is $300 per month plus
$114 per job plus $16 per meal. A typical job involves serving a number of meals to guests at a
corporate function or at a host’s home. The company expected its activity in October to be 27 jobs
and 224 meals, but the actual activity was 29 jobs and 227 meals. The actual cost for catering
supplies in October was $7,500. The activity variance for catering supplies in October would be
closest to:
A) $276 F
B) $276 U
C) $538 U
D) $538 F
65) Dermody Snow Removal’s cost formula for its vehicle operating cost is $2,850 per month plus
$317 per snow-day. For the month of December, the company planned for activity of 16
snow-days, but the actual level of activity was 14 snow-days. The actual vehicle operating cost for
the month was $7,640. The spending variance for vehicle operating cost in December would be
closest to:
A) $282 U
B) $282 F
C) $352 U
D) $352 F
66) Birkner Corporation’s flexible budget performance report for last month shows that actual
indirect materials cost, a variable cost, was $30,444 and that the spending variance for indirect
materials cost was $8,142 favorable. During that month, the company worked 17,700
machine-hours. Budgeted activity for the month had been 18,200 machine-hours. The cost formula
per machine-hour for indirect materials cost must have been closest to:
A) $1.23
B) $1.26
C) $2.12
D) $2.18
67) Tos Corporation’s flexible budget cost formula for indirect materials, a variable cost, is $0.60
per unit of output. If the company’s performance report for last month shows a $800 unfavorable
spending variance for indirect materials and if 9,000 units of output were produced last month,
then the actual costs incurred for indirect materials for the month must have been:
A) $5,600
B) $4,600
C) $5,400
D) $6,200
68) Pittman Framing’s cost formula for its supplies cost is $1,150 per month plus $11 per frame.
For the month of November, the company planned for activity of 789 frames, but the actual level
of activity was 792 frames. The actual supplies cost for the month was $9,480. The spending
variance for supplies cost in November would be closest to:
A) $349 F
B) $382 U
C) $382 F
D) $349 U
69) Lightsey Natural Dying Corporation measures its activity in terms of skeins of yarn dyed. Last
month, the budgeted level of activity was 14,800 skeins and the actual level of activity was 15,100
skeins. The company’s owner budgets for dye costs, a variable cost, at $0.51 per skein. The actual
dye cost last month was $8,660. In the company’s flexible budget performance report for last
month, what would have been the spending variance for dye costs?
A) $959 U
B) $172 U
C) $1,112 U
D) $153 U
70) Wyzard Corporation is a shipping container refurbishment company that measures its output
by the number of containers refurbished. The company has provided the following fixed and
variable cost estimates that it uses for budgeting purposes and the actual results of operations for
February.
Fixed Element per
Month
Variable Element
per Container
Refurbished
Actual Total
for February
Revenue
$
3,800
$
123,400
Employee salaries and wages
$
40,000
$
1,100
$
73,800
Refurbishing materials
$
700
$
21,800
Other expenses
$
29,700
$
28,800
–
When the company prepared its planning budget at the beginning of February, it assumed that 37
containers would have been refurbished. However, 32 containers were actually refurbished during
February.
The revenue variance in the Revenue and Spending Variances column of a report comparing actual
results to the flexible budget for February would have been closest to:
A) $1,800 F
B) $17,200 F
C) $1,800 U
D) $17,200 U
Results
Budget
Containers refurbished (q)
Revenue ($3,800q)
$
$
121,600
$
F
–
71) Younker Corporation is a shipping container refurbishment company that measures its output
by the number of containers refurbished. The company has provided the following fixed and
variable cost estimates that it uses for budgeting purposes and the actual results of operations for
April.
Fixed Element
per Month
Variable Element
per Container
Refurbished
Actual Total
for April
Revenue
$
4,600
$
158,600
Employee salaries and wages
$
46,400
$
1,000
$
79,900
Refurbishing materials
$
600
$
20,800
Other expenses
$
35,800
$
36,300
–
When the company prepared its planning budget at the beginning of April, it assumed that 31
containers would have been refurbished. However, 34 containers were actually refurbished during
April.
The spending variance for “Other expenses” for April would have been closest to:
A) $3,203 F
B) $500 F
C) $500 U
D) $3,203 U
Containers refurbished (q)
Other expenses ($35,800)
$
36,300
35,800
U
–
72) Aultz Tile Installation Corporation measures its activity in terms of square feet of tile installed.
Last month, the budgeted level of activity was 1,180 square feet and the actual level of activity was
1,270 square feet. The company’s owner budgets for supply costs, a variable cost, at $3.50 per
square foot. The actual supply cost last month was $4,980. In the company’s flexible budget
performance report for last month, what would have been the spending variance for supply costs?
A) $850 U
B) $535 U
C) $353 U
D) $315 U
73) Dunbar Footwear Corporation’s flexible budget cost formula for supplies, a variable cost, is
$2.67 per unit of output. The company’s flexible budget performance report for last month showed
a $9,604 favorable spending variance for supplies. During that month, 19,600 units were
produced. Budgeted activity for the month had been 19,200 units. The actual cost per unit for
indirect materials must have been closest to:
A) $1.73
B) $2.67
C) $2.18
D) $1.69
74) Ramkissoon Midwifery’s cost formula for its wages and salaries is $2,060 per month plus $442
per birth. For the month of July, the company planned for activity of 117 births, but the actual level
of activity was 114 births. The actual wages and salaries for the month was $54,500. The spending
variance for wages and salaries in July would be closest to:
A) $726 U
B) $2,052 F
C) $2,052 U
D) $726 F
75) At Rost Corporation, indirect labor is a variable cost that varies with direct labor-hours. Last
month’s performance report showed that actual indirect labor cost totaled $7,540 for the month and
that the associated spending variance was $560 F. If 10,800 direct labor-hours were actually
worked last month, then the flexible budget cost formula for indirect labor must be (per direct
labor-hour) closest to:
A) $0.75
B) $0.80
C) $0.85
D) $0.65
76) Gayner Corporation is an oil well service company that measures its output by the number of
wells serviced. The company has provided the following fixed and variable cost estimates that it
uses for budgeting purposes and the actual results of operations for November.
Fixed Element per
Month
Variable Element
per Well Serviced
Actual Total
for November
Revenue
$
4,300
$
148,400
Employee salaries and wages
$
48,900
$
1,000
$
84,000
Servicing materials
$
600
$
20,200
Other expenses
$
30,300
$
29,600
–
When the company prepared its planning budget at the beginning of November, it assumed that 30
wells would have been serviced. However, 34 wells were actually serviced during November.
The spending variance for “Servicing materials” for November would have been closest to:
A) $2,200 U
B) $200 U
C) $2,200 F
D) $200 F
Wells serviced (q)
34
34
Servicing materials ($600q)
20,200
$
20,400
F
–
77) Palmerton Corporation is an oil well service company that measures its output by the number
of wells serviced. The company has provided the following fixed and variable cost estimates that it
uses for budgeting purposes and the actual results of operations for December.
Fixed Element per
Month
Variable Element
per Well
Serviced
Actual Total
for
December
Revenue
$
$
159,800
Employee salaries and wages
$
41,500
$
$
87,900
Servicing materials
$
$
27,400
Other expenses
$
30,000
$
29,500
–
When the company prepared its planning budget at the beginning of December, it assumed that 40
wells would have been serviced. However, 45 wells were actually serviced during December.
The variance for net operating income in the Revenue and Spending Variances column of a report
comparing actual results to the flexible budget for December would have been closest to:
A) $10,500 F
B) $10,500 U
C) $1,000 F
D) $1,000 U
Wells served (q)
Revenue ($3,500q)
159,800
$
157,500
2,300
F
Expenses:
Employee salaries and wages
($41,500 + $1,000q)
Servicing materials ($600q)
27,400
27,000
400
U
Other expenses ($30,000)
29,500
30,000
500
F
Total expenses
144,800
143,500
1,300
U
Net operating income
15,000
$
14,000
1,000
F
–
78) Higgs Enterprise’s flexible budget cost formula for indirect materials, a variable cost, is $0.75
per unit of output. If the company’s performance report for last month shows a $600 favorable
spending variance for indirect materials and if 8,000 units of output were produced last month,
then the actual costs incurred for indirect materials for the month must have been:
A) $6,000
B) $5,400
C) $6,600
D) $5,200
79) Speyer Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted
level of activity was 1,530 patient-visits and the actual level of activity was 1,490 patient-visits.
The cost formula for administrative expenses is $4.00 per patient-visit plus $15,300 per month.
The actual administrative expense was $19,810. In the clinic’s flexible budget performance report
for last month, the spending variance for administrative expenses was:
A) $820 F
B) $160 F
C) $1,450 F
D) $1,610 F
58
80) Wellmann Corporation is a service company that measures its output by the number of
customers served. The company has provided the following fixed and variable cost estimates that
it uses for budgeting purposes and the actual results of operations for February.
Fixed Element per
Month
Variable Element
per Customer
Served
Actual Total
for February
Revenue
$
4,800
$
149,500
Employee salaries and wages
$
50,500
$
1,200
$
85,800
Travel expenses
$
600
$
18,400
Other expenses
$
41,000
$
40,100
–
When the company prepared its planning budget at the beginning of February, it assumed that 35
customers would have been served. However, 31 customers were actually served during February.
The spending variance for total expenses for February would have been closest to:
A) $3,000 F
B) $10,200 F
C) $10,200 U
D) $3,000 U
Customers served (q)
Expenses:
Employee salaries and wages
($50,500 + $1,200q)
F
Travel expenses ($600q)
18,400
18,600
F
Other expenses ($41,000)
40,100
41,000
F
Total expenses
$
144,300
147,300
3,000
F
–
81) Mcdougald Corporation is a service company that measures its output by the number of
customers served. The company has provided the following fixed and variable cost estimates that
it uses for budgeting purposes and the actual results of operations for March.
Fixed Element
per Month
Variable Element
per Customer
Actual Total
for March
Revenue
$
6,500
$
169,700
Employee salaries and wages
$
58,400
$
1,000
$
83,200
Travel expenses
$
700
$
18,600
Other expenses
$
41,500
$
41,900
–
When the company prepared its planning budget at the beginning of March, it assumed that 21
customers would have been served. However, 26 customers were actually served during March.
The spending variance for “Employee salaries and wages” for March would have been closest to:
A) $1,200 F
B) $3,800 F
C) $3,800 U
D) $1,200 U
Customers served (q)
Employee salaries and wages
($58,400 + $1,000q)
$
83,200
84,400
$
1,200
F
–
82) Hirons 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 $56,840 per month
plus $2,874 per flight plus $13 per passenger. The company expected its activity in November to
be 86 flights and 255 passengers, but the actual activity was 89 flights and 257 passengers. The
actual cost for plane operating costs in November was $305,100. The spending variance for plane
operating costs in November would be closest to:
A) $2,219 U
B) $10,867 U
C) $10,867 F
D) $2,219 F