Ch.9 Practice Quiz with Answers

Chapter 09 Practice Quiz Flexible Budgets and Performance Analysis 239. Chapnick Clinic bases its budgets on the activity measure patient-visits. During September, the clinic planned for 2,800 patient-visits. The clinic has provided the following data concerning the formulas it uses in its budgeting: Fixed element per month Revenue .. ............... ... .. ......... . Personnel expenses ............ .. Medical supplies ................ .. Occupancy expenses .......... .. Administrative expenses ..... . $37,700 $1,500 $8,000 $4,000 Variable element per patient-visit $50.00 $14.80 $9.50 $2.20 $0.30 The clinic has also furnished its income statement for September: Chapnick Clinic Income Statement For the Month Ended September 30 Actual patient-visits............. 3,000 Revenue ............................... . Expenses: Personnel expenses .......... . Medical supplies ............. .. Occupancy expenses ....... .. Administrative expenses .. . Total expense ...................... . Net operating income .......... . $144,990 80,290 29,780 15,300 4,780 130,150 $ 14,840 Required: Prepare a report showing the clinic's activity variances for September. Chapnick Clinic Activity Variances For the Month Ended September 30 (sWtc.) Patient-visits (q) ................... ........ .. .............. Revenue ($50.00q) ....................................... Expenses: Vc mtt.. \=c.. Personnel expenses ($37,700 + $14.80q)..... Medical supplies ($1,500 + $9.50q) ............. Occupancy expenses ($8,000 + $2.20q) ...... Administrative expenses ($4,000 + $0.30q) Total expense ......................................... .. .... Net operating income ................................... Planning Budget 2,800 \ (A cr~ ) Flexible .. ActIVIty B~~ Variances ~ $140,000 $150,000 79,140 28,100 14,160 4,840 126,240 $13,760 82,100 30,000 14,600 4,900 131,600 $18,400 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: Application Learning Objective: 09·01 Prepare a flexible budget Learning Objective: 09-02 Prepare a report showing activity variances Level: Medium $10,000 F 2,960 1,900 440 60 5,360 $4,640 U U U U U F 247. Crovo Corporation uses customers served as its meas of activit. D . g December, the company budgeted for 38,000 customers, but actuall served 40 000 customers The company has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting: Fixed element per month Revenue ...................... . Wages and salaries .... .. Supplies ...................... . Insurance ........ ............ . Miscellaneous ... .. ........ . ~ ~esults - $20,300 $0 $7,500 $3,700 A c,fl,.. ..t for December: 'fO I c:rto Variable element per customer $2.60 $0.80 $0.50 $0.00 $0.30 r:: l eI( 4-°I~ o R 101 500 lott C)O() := (2 -60 tf , (\"""1S""C» ..!w~e~y,~e:!!nJ!~:":': lle · ·d·':":'···I··~ ·· ':':';':': ··""':,",", · "·:':':"~"':':" · ' -..!IU.$~5~ 2~~ ,0 0~0--:"5-2"";','"::;:-o-o-'::; (0 . 'i?o X '+"1 0"'8'0") -t- )."1 3~C> ages an sa anes ...... $18,100 '2-01 cro-c = ( o.So x 14- D,~) Supplies....................... Insurance.................... . $9,400 7 t S cro :!. .., 5'00 \. 11 $18 100 ::(0 . 30 )i.. 'f°/afrt))~ $/ 7~ · I ~, 7 0 , M Isce aneous.............. ~ ­ ,.,.+tJL E:x1>~~ 97, l,dC )<. '----------Required: Nr."3 ,. 30'0 F 19O'bF I l, 2 <::to"() u.. 'fOQ U 0 r &f ern Prepare a report showing the company's revenue and spending variances for December. Label each variance as favorable (F) or unfavorable (U). Cravo Corporation Revenue and Spending Variances For the Month Ended December 31 Customers served (q) ... ....... ................... .... Revenue ($2.60q) .. .. ..... ............. ....... .. ........ Expenses: Wages and salaries ($20,300 + $0 .80q) ..... Supplies ($0.50q) ...... .. ............ .. ...... .. ......... Insurance ($7,500) .... .. ... .. ..... ...... .. ............. Miscellaneous ($3,700 + $0.30q) ............ ... Total expense ........... .............. ... ... ..... .. ....... Net operating income .. .............. .. ........... .. .. Revenue and Spending Variances Flexible Budget 40,000 Actual Results 40,000 $104,000 $101,500 $2,500 U 52,300 20,000 7,500 15,700 95,500 $8,500 52,000 18,100 9,400 18,100 97,600 $3,900 300 1,900 1,900 2,400 2,100 $4,600 F F U U U U AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: Application Learning Objective: 09-01 Prepare a flexible budget Learning Objective: 09-03 Prepare a report showing revenue and spending variances Level: Medium 255. Tajiri Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of May: Tajiri Corporation Comparison of Planning Budget to Actual Results For the Month Ended May 1 Plann' ng Actual Bu et Results 20, 00 Customers served ....................................... . 21,000 Revenue ($3.60q) ........ .. ............................. . Expenses: Wages and salaries ($22,600 + $l.1 Oq) .. . Supplies ($0.50q) .................................... . Insurance ($4,600) ........................ .. ....... .. Miscellaneous ($3,400 + $0.30q) ............ . Total expense ....................... .. .................... . Net operating income ................................ .. V ces 2. ,/ 000 7~b~ $75,800 45,700 8,700 4,600 8,100 67,100 $ 82700 {:"(ex.. 1, 00 U 1, 00 F 0 1 00 F 4--), 7 00 '0, su-a 'I-(b~ Cf I 70-0 7 0 ,SOO 5.' Required: Prepare the company's flexible budget peliormance report for May. Label each variance as favorable (F) or unfavorable (U). 0-0 V<>..¥"l~ rv:..e. s .,....0-0 F· 0 I c:g 0-0 F 0 160'0 F '3 '100-0 ~ '3 ~oo F Tajiri Corporation .,Afl)e~ Flexible Budget Performance Report Part I " ,/"./ For the Month Ended May 31 Customers sexved (q) ........................... Revenue ($3.60q) ........................... ... .. . Expenses: Wages and salaries ($22,600 + $l.10q) Supplies ($0.50q) ................ .... ............ . Insurance ($4,600) ............................. .. Miscellaneous ($3,400 + $0.30q) ........ . Total expense .... ........................ .......... . Net operating income ............ .... ......... .. Planning ",/Activity Bud / Variances 20,000 $72,000 44,600 10,000 4,600 · 9,400 68,600 $3,400 $3,600 F $75,600 U U 45,700 10,500 4,600 9,700 70,500 $5,100 1,100 500 0 300 1,900 $1,700 U U F Tajiri Corporation ~-tlJA Flexible Budget Performance Report Part 2 / ,.,. 4 For the Month Ended May 31 /' evenue and Flexibl Spending B get Variances Customers sexved (q) ............................... 21,00 Revenue ($3.60q) .. ........... .. ...................... Expenses: Wages and salaries ($22,600 + $l.1 Oq) ... Supplies ($0.50q) ..................................... Insurance ($4,600) .. ..... ... ......................... Miscellaneous ($3,400 + $0.30q) ............. Total expense .... .. ... .. ......... ....................... Net operating income ............................... $75,600 $200 45,700 10,500 4,600 9,700 70,500 $5,100 0 1,800 0 1,600 3,400 $3,600 F F F F F $75,800 45,700 8,700 4,600 8,100 67,100 $8,700 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom 's: Application Learning Objective: 09-01 Prepare a flexible budget Learning Objective: 09-04 Prepare a performance report that combines activity variances and revenue and spending variances Learning Objective: 09-06 Understand common errors made in preparing performance reports based on budgets and actual results Level: Medium 283. Carnes 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 Revenue ............................... . F acuity wages .... ... ..... .. ........ . Course supplies ................... . Administrative expenses ..... . t\ ~ Variab e element Variable element $0 $0 $0 $45,200 Required: Prepare a report showing the school's activity variances for February. Label each variance as favorable (F) or unfavorable (U). Carnes Tech Activity Variances For the Month Ended February 28 PI Flexible Budget 1,370 Students (q1) ..................................... . 145 Courses (q2) ..................................... .. Revenue ($428q1) ............................. . Expenses: Faculty wages ($2,700q2) ................. . Course supplies ($77q1 + $47q2) ..... . Administrative expenses ($45,200 + $14q1 + $24q2) ........... . Total expense .... ................................ . Net operating income ....................... .. Activity Variances $586,360 386 100 127611 391,500 112,305 It 1 70612 67,860 ~~__~57_1~,6_65__~+-~ $14,695 \ AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: Application Learning Objective: 09·02 Prepare a report showing activity variances Learning Objective: 09·05 Prepare a flexible budget with more than one cost driver Level: Medium 287. Rizza 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: Revenue ... ....... ... .... ... ..... ...... . Faculty wages ..... ................. . Course supplies ... ... .... ....... .. . Administrative expenses ..... . Fixed element per month $0 $0 $0 $12,800 Variable element per student $150 $0 $25 $5 Variable element per course $0 $2,600 $19 $38 In April, the school budgeted for 1,350 students and 45 courses. The school's income statement showing the actual results for the month appears below: Rizza Tech Income Statement For the Month Ended April 30 1,650 Actual students...... .... ....... .. .. Actual courses ...... ..... .. ...... ... 47 Revenue ..... .. ............ ... ..... ... .. Expenses : Faculty wages .... ...... ....... ..... . Course supplies ... ... ..... ........ . Administrative expenses ..... . Total expense ... ... ..... ........... . Net operating income ... ...... .. $251,490 121,780 42,293 22,746 186,819 $ 64.671 Required: Prepare a report showing the school's revenue and spending variances for April. Label each variance as favorable (F) or unfavorable (U). Rizza Tech Revenue and Spending Variances For the Month Ended April 30 Students (ql) ................... .. ...... ......... ...... ........... ....... . Courses (q2) .... .......... .. ......... ................ ....... .. ........... . Revenue ($150ql) .. ........... ..... .... ..... ..... ...... .. ..... .... .. . . Expenses: Faculty wages ($2,600q2) ... ............ .. ....... ........ ....... . . Course supplies ($25ql + $19q2) ....... .. ...... ..... .... .... . Administrative expenses ($12,800 + $5q 1 + $38q2) Total expense .. ... ...... ........ ....... ... ....... ......... ........ ...... . Net operating income .................. .... ... ...... .. ... ...... .... .. Revenue and Spending Variances Flexible Budget 1,650 47 Actual Results 1,650 47 $247,500 $251,490 $3,990 F 122,200 42,143 22,836 187,179 $60,321 121 ,780 42,293 22,746 186,819 $64,671 420 150 90 360 $4,350 F U F F F AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: Application Learning Objective: 09-03 Prepare a report showing revenue and spending variances Learning Objective: 09-05 Prepare a flexible budget with more than one cost driver Level: Hard 289. Riggan 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: Revenue ............................... . Faculty wages ................... .. . . Course supplies ................... . Administrative expenses .... .. Fixed element per month $0 $0 $0 $39,300 Variable element per student $306 $0 $62 $11 Variable element per course $0 $2,000 $13 $39 In December, the school budgeted for 1,970 students and 163 courses. The school's income statement showing the actual results for the month appears below: Riggan Tech Income Statement For the Month Ended December 31 Actual students...... .. .... .. ....... i, 770 Actual courses.. .. .................. 161 Revenue ... .. ..... ................ ... .. . Expenses: Faculty wages ......... ...... ....... . Course supplies .................. .. Administrative expenses .. .. .. Total expense ...................... . Net operating income ......... .. $529,400 321,890 111,683 65,129 498,702 $ 30.698 Required: Prepare a flexible budget performance report showing both the school's activity variances and revenue and spending variances for December. label each variance as favorable (F) or unfavorable (U). Riggan Tech Flexible Budget Performance Report Part 1 For the Month Ended December 31 Planning Activity Budget Variances 1,970 Students (q1) .. .......... .... ................ .... . Courses (q2) ..................................... . 163 Revenue ($3 06q 1) ............................ . Expenses: Faculty wages ($2,000q2) ........... ... .. . Course supplies ($62q1 + $13q2) .... . Administrative expenses ($39,300 + $11q1 + $39q2) ......... .. Total expense ....... ............................ . Net operating income ....................... . $602,820 $61,200 Flexible Budget 1,770 161 U $541,620 326,000 124,259 4,000 F 12,426 F 322,000 111,833 67,327 517,586 $85,234 2,278 F 18,704 F $42,496 U 65,049 498,882 $42,738 Riggan Tech Flexible Budget Performance Report Part 2 For the Month Ended December 31 Revenue and Flexible Spending Variances Budget 1,770 Students (q1) '" .. ............. ........................... Courses (q2) ........................ ...................... 161 161 Revenue ($306q1) ............... ................... ... Expenses: Faculty wages ($2,000q2) ......................... Course supplies ($62q1 + $13q2) ............. Administrative expenses ($39,300 + $11q1 + $39q2) ..................... ................ Total expense ......................... ................... Net operating income ............ .................... $541,620 322,000 111,833 65,049 498,882 $42,738 Actual Results 1,770 U $529,400 110 F 150 F 321,890 111,683 $12,220 80 180 $12,040 U F U - 65,129 498,702 $30,698 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: Application Learning Objective: 09-04 Prepare a performance report that combines activity variances and revenue and spending variances Learning Objective: 09-05 Prepare a flexible budget with more than one cost driver Level: Hard