Question
Boyne University offers an extensive continuing education program in many cities throughout the state. For the convenience of its faculty and administrative staff and to
Boyne University offers an extensive continuing education program in many cities throughout the state. For the convenience of its faculty and administrative staff and to save costs, the university operates a motor pool. The motor pool's monthly planning budget is based on operating 23 vehicles; however, for the month of March the university purchased one additional vehicle. The motor pool furnishes gasoline, oil, and other supplies for its automobiles. A mechanic does routine maintenance and minor repairs. Major repairs are performed at a nearby commercial garage.
The following cost control report shows actual operating costs for March of the current year compared to the planning budget for March.
Boyne University Motor Pool
Cost Control Report
For the Month Ended March 31
March Actual Planning Budget (Over) Under Budget
Miles 57,600 49600
Auto 24 23
Gasoline $7400.00 $6448 (952)
Oil, Minor Repairs, parts 6780 6448 (332)
Outside repairs 1030 851 (179)
Insurance 1800 1679 (121)
Salaries and benefits 8610 8610 (0)
Vehicle depreciation 4752 4554 (198)
Total $30372 $28590 ($1782)
The planning budget was based on the following assumptions:
- $0.13 per mile for gasoline.
- $0.13 per mile for oil, minor repairs, and parts.
- $37 per automobile per month for outside repairs.
- $73 per automobile per month for insurance.
- $8,610 per month for salaries and benefits.
- $198 per automobile per month for depreciation.
The supervisor of the motor pool is unhappy with the report, claiming it paints an unfair picture of the motor pool's performance.
1. Determine the spending variances for March.
Boyne University Motor Pool
Spending Variances
For the Month Ended March 31
Favorable or Unfavorable
Gasoline: F
Oil, minor repairs, parts: F
Outside repairs: U
Insurance: U
Salaries and benefits: None
Vehicle depreciation: None
Total: F
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