Question

1.  

Dinham Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During March, the kennel budgeted for 4,300 tenant-days, but its actual level of activity was 4,340 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March:

Data used in budgeting:

	Fixed element per month			Variable element per tenant-day
Revenue		-		$	35.20
Wages and salaries	$	3,200		$	8.20
Food and supplies		2,200			14.70
Facility expenses		8,700			3.70
Administrative expenses		7,200			0.10
Total expenses	$	21,300		$	26.70

Actual results for March:

Revenue	$	140,230
Wages and salaries	$	28,620
Food and supplies	$	66,350
Facility expenses	$	24,110
Administrative expenses	$	7,102

The revenue variance for March would be closest to:

2. (4)  

Hirons 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 $59,900 per month plus $3,248 per flight plus $11 per passenger. The company expected its activity in November to be 85 flights and 258 passengers, but the actual activity was 88 flights and 260 passengers. The actual cost for plane operating costs in November was $337,780. The spending variance for plane operating costs in November would be closest to:

3. (8)

The following labor standards have been established for a particular product:

Standard labor-hours per unit of output		8.6	hours
Standard labor rate	$	15.50	per hour

The following data pertain to operations concerning the product for the last month:

Actual hours worked		8,500	hours
Actual total labor cost	$	129,200
Actual output		840	units

What is the labor rate variance for the month?

Answer 1

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Dinham Kennel	Budget data	Note
Level of activity	4,300.00	A
Sell price per activity	35.20	B
Budgeted Revenue	151,360.00	C=A*B
Less: Actual Revenue	(140,230.00)	D
Revenue variance (U)	11,130.00	E=C-D
Heron Air	Per Month	Per Flight	Per Passenger	Total
Budget data					Note
Level of activity	1.00	85.00	258.00		F
Cost per activity	59,900.00	3,248.00	11		G
Budgeted Revenue	59,900.00	276,080.00	2,838.00	338,818.00	H=F*G
Less: Actual Costs				(337,780.00)	I
Spending variance (F)				1,038.00	J=H-I
Answer 3 (8)	Direct Labor	Note
Calculation of Standard cost
Input per unit	8.60	K
Standard Rate per unit	15.50	L
Standard cost per unit	133.30	M=K*L
Standard cost of Actual hours worked
Actual hours worked	8,500.00	N
Standard Rate per unit	15.50	O
Standard cost of Actual hours worked	131,750.00	P=N*O
Actual labor cost	129,200.00	Q
Rate Variance (F)	2,550.00	R=P-Q