Question

1.)During April, Elsa Corporation budgeted for 27,000 customers, but actually served 23,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:

Revenue: $4.10q

Wages and salaries: $33,300 + $1.10q

Supplies: $0.70q

Insurance: $8,600

Miscellaneous expense: $3,700 + $0.40q

Prepare the company's flexible budget for April based on the actual level of activity for the month.

2.)Buehler Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for October was based on 3,400 meals, but the diner actually served 3,200 meals. The diner's director has provided the following cost formulas to use in budgets:

                                               Fixed Element per Month Variable Element per Month

Groceries …………………….. $0 $2.80

Kitchen Operations………….. $5300 $1.75

Administrative expense …….. $3600 $0.75

Fundraising expenses………… $1500 $0

Compute the activity variance for administrative expenses caused by serving less meals than expected. State answer as positive number.

3.)Gettys Corporation bases its budgets on the activity measure customers served. During October, the company planned to serve 24,000 customers, but actually served 28,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting:

                                                 Fixed Element per Month Variable Element per Month

Revenue …………………….. $0 $4.90

Wages and Salaries………… $29900 $1.90

Supplies………………. …….. $0 $0.70

Insurance…………..………… $9100 $0

Misc Expense…………………. $5500 $0.10

Compute the revenue activity variance. State your answer as a positive.

4.)Gettys Corporation bases its budgets on the activity measure customers served. During October, the company planned to serve 24,000 customers, but actually served 28,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting:

                                                     Fixed Element per Month Variable Element per Month

Revenue …………………….. $0 $4.90

Wages and Salaries………… $29900 $1.90

Supplies………………. …….. $0 $0.70

Insurance…………..………… $9100 $0

Misc Expense…………………. $5500 $0.10

Compute the total expense activity variance. State your answer as a positive.

5.) Kaylar Clinic uses patient-visits as its measure of activity. During September, the clinic budgeted for 3,000 patient-visits, but its actual level of activity was 2,900 patient-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for September:

Data used in budgeting:

                                                 Fixed Element per Month Variable Element per Month

Revenue …………………….. $0 $37.20

Personal Expenses…………. $27600 $11.30

Medical Expenses………….. $1500 $6.80

Occupancy Expenses…….... $6200 $1.70

Administrative Expenses…... $3600 $0.30

Actual results for September:

Revenue …………………….. $105010                                   

Personal Expenses…………. $61020                                   

Medical Expenses………….. $22120                                   

Occupancy Expenses…….... $10930                                 

Administrative Expenses…... $4570

Compute the total Revenue variance (due to a difference in the actual amount collected per customer from expected). State answer as a positive.

Answer 1

Answer to Question 1:

Answer to Question 2:

Planning Budget:

Number of Meals Served = 3,400

Administrative Expense = $3,600 + $0.75 * Number of Meals Served
Administrative Expense = $3,600 + $0.75 * 3,400
Administrative Expense = $6,150

Flexible Budget:

Number of Meals Served = 3,200

Administrative Expense = $3,600 + $0.75 * Number of Meals Served
Administrative Expense = $3,600 + $0.75 * 3,200
Administrative Expense = $6,000

Activity Variance for Administrative Expense = Administrative Expense for Planning Budget - Administrative Expense for Flexible Budget
Activity Variance for Administrative Expense = $6,150 - $6,000
Activity Variance for Administrative Expense = $150 Favorable