FinalExam TestBank 10-End.docx

# FinalExam TestBank 10-End.docx - Mondo Snow Removal's cost...

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Mondo Snow Removal's cost formula for its vehicle operating cost is \$2,010 per month plus \$501 per snow-day. For the month of January, the company planned for activity of 23 snow-days, but the actual level of activity was 32 snow-days. The actual vehicle operating cost for the month was \$17,610. The activity variance for vehicle operating cost in January would be closest to: \$4,077U \$4,077F \$4,509U \$4,509F Flexible budget [\$2,010 + (\$501 × 32)] \$ 18,042 Planning budget [\$2,010 + (\$501 × 23)] 13,533 Activity variance \$ 4,509 Because the flexible budget is greater than the planning budget, the variance is unfavorable (U). Bobe 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 \$45,300 per month plus \$2,940 per flight plus \$7 per passenger. The company expected its activity in May to be 52 flights and 217 passengers, but the actual activity was 55 flights and 216 passengers. The actual cost for plane operating costs in May was \$207,687. The plane operating costs in the flexible budget for May would be closest to: Noreen 4e Rechecks 2017-31-03 \$208,512 \$199,699 \$207,687 \$210,561 Cost = Fixed cost + (Variable cost per unit 1 × q 1 ) + (Variable cost per unit 2 × q 2 ) = \$45,300 + (\$2,940 × 55) + (\$7 × 216) = \$208,512 Shelby Boat Wash's cost formula for its cleaning equipment and supplies is \$2,320 per month plus \$27 per boat. For the month of September, the company planned for activity of 59 boats, but the actual level of activity was 22 boats. The actual cleaning equipment and supplies for the month was \$2,961. The spending variance for cleaning equipment and supplies in September would be closest to: \$952 F \$952U \$47 F \$47 U Actual results \$ 2,96 1 Flexible budget [\$2,320 + (\$27 × 22)] 2,91

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4 Spending variance \$ 47 Because the actual expense is greater than the flexible budget, the variance is unfavorable (U). Glassing Clinic uses client-visits as its measure of activity. During September, the clinic budgeted for 3,900 client-visits, but its actual level of activity was 3,860 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 \$ 20.60 Personnel expenses \$ 20,500 \$ 5.40 Medical supplies 1,225 3.90 Occupancy expenses 4,015 1.50 Administrative expenses 3,150 0.80 Total expenses \$ 28,890 \$ 11.60 The activity variance for administrative expenses in September would be closest to: \$132 F \$32 U \$152 U \$32 F Flexible budget [\$3,150 + (\$0.80 × 3,860)] \$ 6,23 8 Planning budget [\$3,150 + (\$0.80 × 3,900)] 6,27 0 Activity variance \$ 32 Because the flexible budget is less than the planning budget, the variance is favorable (F). Tysor Framing's cost formula for its supplies cost is \$3,510 per month plus \$10 per frame. For the month of July, the company planned for activity of 1030 frames, but the actual level of activity was 1033 frames. The actual supplies cost for the month was \$13,658. The spending variance for supplies cost in July would be closest to: \$152 U
\$182 F \$152 F \$182 U Actual results \$ 13,658 Flexible budget [\$3,510 + (\$10×1,033)] 13,840 Spending variance \$ 182 Because the actual expense is less than the flexible budget, the variance is favorable (F).

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