Exercise 9-15 (continued)
3. The flexible budget performance report appears below. This report does not include revenue or net
operating income because the production department is a cost center that does not have any
revenue.
Packaging Solutions Corporation
Production Department Flexible Budget Performance Report
For the Month Ended March 31
Actual
Results
Flexible
Budget
Activity
Variances
Planning
Budget
Labor-hours (q) ………………………….
8,400
8,400
8,000
Direct labor ($15.80q) ………………….
$134,730
$2,010
U
$132,720
$6,320
U
$126,400
Indirect labor ($8,200 + $1.60q) ……
19,860
1,780
F
21,640
640
U
21,000
Utilities ($6,400 + $0.80q)…………….
14,570
1,450
U
13,120
320
U
12,800
Supplies ($1,100 + $0.40q) …………..
4,980
520
U
4,460
160
U
4,300
Equipment depreciation
($23,000 + $3.70q) …………………..
54,080
0
54,080
1,480
U
52,600
Factory rent ($8,400) …………………..
8,700
300
U
8,400
0
8,400
Property taxes ($2,100) ………………..
2,100
0
2,100
0
2,100
Factory administration
($11,700 + $1.90q) …………………..
26,470
1,190
F
27,660
760
U
26,900
Total expense …………………………….
$265,490
$1,310
U
$264,180
$9,680
U
$254,500
Exercise 9-18 (45 minutes)
1. The planning budget based on 3 courses and 45 students appears
below:
Gourmand Cooking School
Planning Budget
For the Month Ended September 30
Budgeted courses (q1) ……………………………………….
3
Budgeted students (q2) ………………………………………
45
Revenue ($800q2) …………………………………………….
$36,000
Expenses:
Instructor wages ($3,080q1) ……………………………..
9,240
Classroom supplies ($260q2) …………………………….
11,700
Utilities ($870 + $130q1) ………………………………….
1,260
Campus rent ($4,200) ……………………………………..
4,200
Insurance ($1,890) …………………………………………
1,890
Administrative expenses ($3,270 + $15q1 +$4q2) ….
3,495
Total expense ………………………………………………….
31,785
Net operating income ………………………………………..
$ 4,215
2. The flexible budget based on 3 courses and 42 students appears below:
Gourmand Cooking School
Flexible Budget
For the Month Ended September 30
Actual courses (q1) ……………………………………………
3
Actual students (q2) …………………………………………..
42
Revenue ($800q2) …………………………………………….
$33,600
Expenses:
Instructor wages ($3,080q1) ……………………………..
9,240
Classroom supplies ($260q2) …………………………….
10,920
Utilities ($870 + $130q1) ………………………………….
1,260
Campus rent ($4,200) ……………………………………..
4,200
Insurance ($1,890) …………………………………………
1,890
Administrative expenses ($3,270 + $15q1 +$4q2) ….
3,483
Total expense ………………………………………………….
30,993
Net operating income ………………………………………..
$ 2,607
Problem 9-19 (30 minutes)
1. The activity variances are shown below:
FAB Corporation
Activity Variances
For the Month Ended March 31
Flexible
Budget
Planning
Budget
Activity
Variances
Machine-hours (q) ……………………..
26,000
30,000
Utilities ($20,600 + $0.10q) …………
$ 23,200
$ 23,600
$ 400
F
Maintenance ($40,000 + $1.60q) ….
81,600
88,000
6,400
F
Supplies ($0.30q) ………………………
7,800
9,000
1,200
F
Indirect labor ($130,000 + $0.70q) .
148,200
151,000
2,800
F
Depreciation ($70,000) ……………….
70,000
70,000
0
Total ……………………………………….
$330,800
$341,600
$10,800
F
The activity variances are all favorable because the actual activity was
less than the planned activity and therefore all of the variable costs
should be lower than planned in the original budget.