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Solutions Manual, Chapter 10 21
Exercise 10-15 (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
Spending
Variances
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
22 Managerial Accounting for Managers, 4th Edition
Exercise 10-15 (continued)
Solutions Manual, Chapter 10 23
Exercise 10-16 (20 minutes)
Via Gelato
Revenue and Spending Variances
For the Month Ended June 30
Actual
Results
Flexible
Budget
Revenue and
Spending
Variances
Liters (q) .....................................
6,200
6,200
Revenue ($12.00q) ......................
$71,540
$74,400
$2,860
U
Expenses:
Raw materials ($4.65q) .............
29,230
28,830
400
U
Wages ($5,600 + $1.40q) .........
13,860
14,280
420
F
Utilities ($1,630 + $0.20q) .........
3,270
2,870
400
U
Rent ($2,600) ...........................
2,600
2,600
0
Insurance ($1,350) ...................
1,350
1,350
0
Miscellaneous ($650 + $0.35q) ..
2,590
2,820
230
F
Total expense ..............................
52,900
52,750
150
U
Net operating income ...................
$18,640
$21,650
$3,010
U
24 Managerial Accounting for Managers, 4th Edition
Exercise 10-17 (30 minutes)
AirQual Test Corporation
Flexible Budget Performance Report
For the Month Ended February 28
Actual
Results
Revenue
and
Spending
Variances
Flexible
Budget
Activity
Variances
Planning
Budget
Jobs (q) ...............................................
52
52
50
Revenue ($360.00q) .............................
$18,950
$230
F
$18,720
$720
F
$18,000
Expenses:
Technician wages ($6,400) .................
6,450
50
U
6,400
0
6,400
Mobile lab operating expenses
($2,900 + $35.00q) .........................
4,530
190
F
4,720
70
U
4,650
Office expenses ($2,600 + $2.00q) .....
3,050
346
U
2,704
4
U
2,700
Advertising expenses ($970) ...............
995
25
U
970
0
970
Insurance ($1,680) .............................
1,680
0
1,680
0
1,680
Miscellaneous expenses
($500 + $3.00q) ..............................
465
191
F
656
6
U
650
Total expense .......................................
17,170
40
U
17,130
80
U
17,050
Net operating income ............................
$ 1,780
$190
F
$ 1,590
$640
F
$ 950
Solutions Manual, Chapter 10 25
Exercise 10-18 (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
26 Managerial Accounting for Managers, 4th Edition
Exercise 10-18 (continued)
3. The flexible budget performance report for September appears below:
Gourmand Cooking School
Flexible Budget Performance Report
For the Month Ended September 30
Actual
Results
Revenue
and
Spending
Variances
Flexible
Budget
Activity
Variances
Planning
Budget
Courses (q1) ..................................
3
3
3
Students (q2) .................................
42
42
45
Revenue ($800q2) ..........................
$32,400
$1,200
U
$33,600
$2,400
U
$36,000
Expenses:
Instructor wages ($3,080q1) ........
9,080
160
F
9,240
0
9,240
Classroom supplies ($260q2) ........
8,540
2,380
F
10,920
780
F
11,700
Utilities ($870 + $130q1) .............
1,530
270
U
1,260
0
1,260
Campus rent ($4,200) ..................
4,200
0
4,200
0
4,200
Insurance ($1,890) ......................
1,890
0
1,890
0
1,890
Administrative expenses
($3,270 + $15q1 +$4q2) ...........
3,790
307
U
3,483
12
F
3,495
Total expense ................................
29,030
1,963
F
30,993
792
F
31,785
Net operating income .....................
$ 3,370
$ 763
F
$ 2,607
$ 1,608
U
$ 4,215
Solutions Manual, Chapter 10 27
Problem 10-19 (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
28 Managerial Accounting for Managers, 4th Edition
Problem 10-19 (continued)
2. The spending variances are computed below:
FAB Corporation
Spending Variances
For the Month Ended March 31
Actual
Results
Flexible
Budget
Spending
Variances
Machine-hours (q) ..........................
26,000
26,000
Utilities ($20,600 + $0.10q) ............
$ 24,200
$ 23,200
$1,000
U
Maintenance ($40,000 + $1.60q) ....
78,100
81,600
3,500
F
Supplies ($0.30q) ...........................
8,400
7,800
600
U
Indirect labor ($130,000 + $0.70q) .
149,600
148,200
1,400
U
Depreciation ($70,000) ...................
71,500
70,000
1,500
U
Total ..............................................
$331,800
$330,800
$1,000
U
maintenance might have resulted from performing less maintenance.
Since these variances are all fairly large, they should all probably be
investigated.
Solutions Manual, Chapter 10 29
Problem 10-20 (30 minutes)
1.
Milano Pizza
Flexible Budget Performance Report
For the Month Ended November 30
Actual
Results
Revenue
and
Spending
Variances
Flexible
Budget
Activity
Variances
Planning
Budget
Pizzas (q1) ......................................
1,240
1,240
1,200
Deliveries (q2) .................................
174
174
180
Revenue ($13.50q1) ........................
$17,420
$680
F
$16,740
$540
F
$16,200
Expenses:
Pizza ingredients ($3.80q1) ............
4,985
273
U
4,712
152
U
4,560
Kitchen staff ($5,220) ...................
5,281
61
U
5,220
0
5,220
Utilities ($630 + $0.05q1) ..............
984
292
U
692
2
U
690
Delivery person ($3.50q2)..............
609
0
609
21
F
630
Delivery vehicle ($540 + $1.50q2) ..
655
146
F
801
9
F
810
Equipment depreciation ($275) ......
275
0
275
0
275
Rent ($1,830) ...............................
1,830
0
1,830
0
1,830
Miscellaneous ($820 + $0.15q1) ....
954
52
F
1,006
6
U
1,000
Total expense .................................
15,573
428
U
15,145
130
U
15,015
Net operating income ......................
$ 1,847
$252
F
$ 1,595
$410
F
$ 1,185
30 Managerial Accounting for Managers, 4th Edition
Problem 10-20 (continued)
2. Some of the activity variances are favorable and some are unfavorable.
revenue is favorable, but the activity variances for pizza ingredients,
