Chapter 8 InClass Exercise

Chapter 8 InClass Exercise - Chapter 8 Flexible Budgets and...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 8 Flexible Budgets and Performance Analysis In-Class Exercise Smith provides lawn care services to residents in a large upscale lake community. He estimates for planning purposes that he will move 500 lawns during June. Since all of the lawns are of similar size, Smith felt that the number of lawns mowed in a month would be the best way to measure overall activity for his business. Smiths actual results for June compared to the static budget follow: Discussion Questions: (1) For those variances that are unfavorable, has Smith done a poor job controlling costs? (2) For those variances that are favorable, has Smith done a good job controlling costs? (3) Actual activity is above planned activity, so shouldnt the variable costs be higher if actual activity is higher? (4) So what is the relevant question here? Revenue/Cost Static Actual Formulas Budget Results Variances Number of lawns (Q) 500 550 Revenue ($75Q) 37,500 $ 43,000 $ Expenses: Wages and salaries ($5,000 + $30Q) 20,000 $ 23,500 $ Gasoline and supplies ($9Q) 4,500 5,100 Equipment maintenance ($3Q)...
View Full Document

Page1 / 3

Chapter 8 InClass Exercise - Chapter 8 Flexible Budgets and...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online