396) Tuton Memorial Diner is a charity supported by donations that provides free meals to the
homeless. The diner’s budget for July was based on 3,200 meals. The diner’s director has provided
the following cost formulas to use in budgets:
Fixed element
per month
Variable element
per meal
Groceries
$0
$2.75
Kitchen operations
$4,000
$1.00
Administrative expenses
$3,700
$0.70
Fundraising expenses
$1,400
$0.00
The director has also provided the diner’s statement of actual expenses for the month:
Tuton Memorial Diner
Statement of Expenses
For the Month Ended July 31
Actual meals
3,300
Groceries
$9,005
Kitchen operations
7,310
Administrative expenses
5,910
Fundraising expenses
1,380
Total expense
$23,605
Required:
Prepare a report showing the spending variances for each of the expenses and for total expenses for
July. Label each variance as favorable (F) or unfavorable (U).
Meals (q)
Groceries ($2.75q)
Kitchen operations ($4,000 + $1.00q)
$0.70q)
Fundraising expenses ($1,400)
Total expense
397) Kolstad Clinic uses patient-visits as its measure of activity. During September, the clinic
budgeted for 2,200 patient-visits, but its actual level of activity was 2,600 patient-visits. The clinic
uses the following revenue and cost formulas in its budgeting, where q is the number of
patient-visits:
Revenue: $61.70q
Personnel expenses: $39,000 + $16.10q
Medical supplies: $1,300 + $11.90q
Occupancy expenses: $8,200 + $2.20q
Administrative expenses: $5,900 + $0.20q
The clinic reported the following actual results for September:
Revenue
$
167,370
Personnel expenses
$
76,880
Medical supplies
$
33,500
Occupancy expenses
$
14,570
Administrative expenses
$
6,370
–
Required:
Prepare a report showing the clinic’s revenue and spending variances for September. Label each
variance as favorable (F) or unfavorable (U).
Patient-visits (q)
2,600
Revenue ($61.70q)
$
167,370
$
160,420
$
6,950
Expenses:
Occupancy expenses ($8,200 + $2.20q)
$0.20q)
Total expense
131,320
2,120
Net operating income
9,070
–
398) Heise Urban Diner is a charity supported by donations that provides free meals to the
homeless. The diner’s budget for July was based on 3,500 meals. The diner’s director has provided
the following cost data to use in the budget: groceries, $2.35 per meal; kitchen operations, $4,000
per month plus $1.80 per meal; administrative expenses, $2,800 per month plus $0.60 per meal;
and fundraising expenses, $1,600 per month. The director has also provided the diner’s statement
of actual expenses for the month:
Heise Urban Diner
Statement of Expenses
For the Month Ended July 31
Actual meals
3,800
Groceries
$
8,730
Kitchen operations
10,830
Administrative expenses
5,040
Fundraising expenses
1,660
Total expense
$
26,260
–
Required:
Prepare a report showing the diner’s spending variances for each of the expenses and for total
expenses for July. Label each variance as favorable (F) or unfavorable (U).
Meals (q)
Groceries ($2.35q)
Kitchen operations ($4,000 + $1.80q)
$0.60q)
Fundraising expenses ($1,600)
Total expense
–
399) Lubinsky 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.
Fixed Element
per Month
Variable Element
per Well Serviced
Revenue
$4,300
Employee salaries and wages
$40,800
$1,300
Servicing materials
$500
Other expenses
$29,000
When the company prepared its planning budget at the beginning of August, it assumed that 28
wells would have been serviced. However, 31 wells were actually serviced during August.
Required:
Prepare a report showing the company’s activity variances for August. Indicate in each case
whether the variance is favorable (F) or unfavorable (U).
Wells serviced (q)
Revenue ($4,300q)
Expenses:
Other expenses ($29,000)
Total expenses
125,600
Net operating income
400) Blakesley 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.
Fixed Element
per Month
Variable Element
per Customer
Served
Revenue
$4,200
Employee salaries and wages
$51,000
$1,000
Travel expenses
$500
Other expenses
$39,700
When the company prepared its planning budget at the beginning of January, it assumed that 38
customers would have been served. However, 42 customers were actually served during January.
Required:
Prepare a report showing the company’s activity variances for January. Indicate in each case
whether the variance is favorable (F) or unfavorable (U).
Customers served (q)
Revenue ($4,200q)
Expenses:
($51,000 + $1,000q)
Travel expenses ($500q)
Other expenses ($39,700)
Total expenses
153,700
Net operating income
$22,700
401) Morles Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company
bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One
vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company
uses the following data in its budgeting:
Fixed element
per month
Variable element
per guest
Variable
element per jeep
Revenue
$
0
$
100
$
0
Tour guide wages
$
0
$
0
$
164
Vehicle expenses
$
3,700
$
13
$
49
Administrative expenses
$
1,600
$
2
$
0
–
In May, the company budgeted for 407 guests and 113 jeeps. The company’s income statement
showing the actual results for the month appears below:
Morles Jeep Tours
Income Statement
For the Month Ended May 31
Actual guests
402
Actual jeeps
112
Revenue
$
39,740
Expenses:
Tour guide wages
18,178
Vehicle expenses
14,604
Administrative expenses
2,374
Total expense
35,156
Net operating income
$
4,584
–
Required:
Prepare a flexible budget performance report showing both the company’s activity variances and
revenue and spending variances for May. Label each variance as favorable (F) or unfavorable (U).
407
Flexible
Guests (q1)
Jeeps (q2)
Revenue ($100q1)
$
39,740
460
U
$
$
500
U
Expenses:
18,178
190
F
164
F
14,604
190
U
114
F
($1,600 + $2q1)
2,374
30
F
2,404
10
F
Total expense
35,156
30
F
288
F
–
402) Roberds Tech is a for-profit vocational school. The school bases its budgets on two measures
of activity (i.e., cost drivers), namely student and course. The school uses the following data in its
budgeting:
Fixed element
per month
Variable element per student
Variable
element per
course
Revenue
$
0
$
198
$
0
Faculty wages
$
0
$
0
$
2,900
Course supplies
$
0
$
32
$
20
Administrative expenses
$
25,500
$
7
$
32
–
In March, the school budgeted for 1,710 students and 68 courses. The school’s income statement
showing the actual results for the month appears below:
Roberds Tech
Income Statement
For the Month Ended March 31
Actual students
1,610
Actual courses
71
Revenue
$
311,340
Expenses:
Faculty wages
204,950
Course supplies
52,590
Administrative expenses
39,562
Total expense
267,102
Net operating income
$
14,238
–
Required:
Prepare a flexible budget performance report showing both the school’s activity variances and
revenue and spending variances for March. Label each variance as favorable (F) or unfavorable
(U).
Budget
409
403) Salina Clinic uses patient-visits as its measure of activity. The clinic has provided the
following report:
Salina Clinic
Comparison of Actual Results to Planning Budget
For the Month Ended February 28
Actual Results
Planning
Budget
Variances
Patient-visits (q)
2,000
2,100
Revenue ($53.90q)
$
107,880
$
113,190
$
5,310
U
Expenses:
Personnel expenses ($26,100 + $19.20q)
62,840
66,420
3,580
F
Medical supplies ($1,400 + $7.20q)
16,250
16,520
270
F
Occupancy expenses ($6,700 + $2.60q)
11,970
12,160
190
F
Administrative expenses ($4,300 + $0.20q)
4,710
4,720
10
F
Total expense
95,770
99,820
4,050
F
Net operating income
$
12,110
$
13,370
$
1,260
U
–
Required:
Prepare the clinic’s flexible budget performance report for February. Label each variance as
favorable (F) or unfavorable (U).
410
404) Otomo Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company
bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One
vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company
uses the following data in its budgeting:
Fixed element
per month
Variable element
per guest
Variable element
per jeep
Revenue
$
0
$
134
$
0
Tour guide wages
$
0
$
0
$
117
Vehicle expenses
$
4,700
$
13
$
65
Administrative expenses
$
2,200
$
1
$
0
–
In July, the company budgeted for 389 guests and 180 jeeps. The company’s income statement
showing the actual results for the month appears below:
Otomo Jeep Tours
Income Statement
For the Month Ended July 31
Actual guests
394
Actual jeeps
175
Revenue
$
53,986
Expenses:
Tour guide wages
20,435
Vehicle expenses
21,247
Administrative expenses
2,544
Total expense
44,226
Net operating income
$
9,760
–
Required:
Prepare a report showing the company’s activity variances for July. Label each variance as
favorable (F) or unfavorable (U).
Variances
Guests (q1)
394
389
Jeeps (q2)
175
180
Expenses:
Tour guide wages ($117q2)
20,475
585
F
21,060
Vehicle expenses ($4,700 + $13q1 + $65q2)
21,197
260
F
21,457
Administrative expenses ($2,200 + $1q1)
U
Total expense
44,266
840
F
45,106
Net operating income
$
1,510
F
$
–
405) Rossean Tech is a for-profit vocational school. The school bases its budgets on two measures
of activity (i.e., cost drivers), namely student and course. The school uses the following data in its
budgeting:
Fixed element
per month
Variable
element
per student
Variable element
per course
Revenue
$
0
$
354
$
0
Faculty wages
$
0
$
0
$
2,300
Course supplies
$
0
$
48
$
40
Administrative expenses
$
41,700
$
13
$
21
–
In October, the school budgeted for 1,400 students and 127 courses. The actual activity for the
month was 1,500 students and 129 courses.
Required:
Prepare a report showing the school’s activity variances for October. Label each variance as
favorable (F) or unfavorable (U).
Students (q1)
1,500
1,400
Courses (q2)
127
Revenue ($354q1)
$
F
495,600
Expenses:
Faculty wages ($2,300q2)
U
292,100
Course supplies ($48q1 + $40q2)
U
72,280
$13q1 + $21q2)
Total expense
U
426,947
Net operating income
$
F
68,653
–
406) Bruer Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company
bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One
vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company
uses the following data in its budgeting:
Fixed element
per month
Variable element
per guest
Variable element
per jeep
Revenue
$
0
$
161
$
0
Tour guide wages
$
0
$
0
$
189
Vehicle expenses
$
4,900
$
10
$
66
Administrative expenses
$
2,000
$
1
$
0
–
In November, the company budgeted for 348 guests and 143 jeeps. The actual activity for the
month was 373 guests and 139 jeeps.
Required:
Prepare a report showing the company’s activity variances for November. Label each variance as
favorable (F) or unfavorable (U).