Question
Trevorrow Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June,
Trevorrow Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June, the company budgeted for 6,100 units, but its actual level of activity was 6,060 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June:
Data used in budgeting:
Fixed element per month | Variable element per unit | ||||
Revenue | - | $ | 28.20 | ||
Direct labor | $ | 0 | $ | 3.30 | |
Direct materials | 0 | 10.20 | |||
Manufacturing overhead | 39,200 | 1.40 | |||
Selling and administrative expenses | 24,800 | 0.30 | |||
Total expenses | $ | 64,000 | $ | 15.20 | |
Actual results for June:
Revenue | $ | 177,558 |
Direct labor | $ | 19,448 |
Direct materials | $ | 59,532 |
Manufacturing overhead | $ | 47,559 |
Selling and administrative expenses | $ | 26,673 |
The activity variance for net operating income in June would be closest to:
Multiple Choice
-
$520 F
-
$520 U
-
$9,046 U
-
$9,046
-
2-
Paulis 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 February, the kennel budgeted for 5,200 tenant-days, but its actual level of activity was 5,220 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February:
Data used in budgeting:
Fixed element per month Variable element per tenant-day Revenue - $ 31.70 Wages and salaries $ 4,200 $ 7.70 Food and supplies 800 12.50 Facility expenses 8,600 4.70 Administrative expenses 7,600 0.50 Total expenses $ 21,200 $ 25.40 Actual results for February:
Revenue $ 108,980 Wages and salaries $ 23,620 Food and supplies $ 36,802 Facility expenses $ 19,370 Administrative expenses $ 9,164 The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for February would be closest to:
Multiple Choice
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$8,338 F
-
$8,338 U
-
$8,464 U
-
$8,464 F
-
3-
Paulis 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 February, the kennel budgeted for 5,100 tenant-days, but its actual level of activity was 5,120 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February:
Data used in budgeting:
Revenue - $ 31.60 Wages and salaries $ 4,100 $ 7.60 Food and supplies 700 12.40 Facility expenses 9,100 4.60 Administrative expenses 8,900 0.40 Total expenses $ 22,800 $ 25.00 Actual results for February:
Revenue $ 108,880 Wages and salaries $ 23,610 Food and supplies $ 36,801 Facility expenses $ 19,360 Administrative expenses $ 9,162 The activity variance for net operating income in February would be closest to:
Multiple Choice
-
$9,087 F
-
$132 F
-
$132 U
-
$9,087 U
-
4-
Kirnon Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 3,400 client-visits, but its actual level of activity was 3,310 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:
Fixed element per month Variable element per client-visit Revenue - $ 39.40 Personnel expenses $ 35,400 $ 10.60 Medical supplies 1,400 7.40 Occupancy expenses 8,400 1.40 Administrative expenses 5,400 0.50 Total expenses $ 50,600 $ 19.90 The activity variance for net operating income in July would be closest to:
Multiple Choice
-
$1,005 F
-
$1,755 F
-
$1,005 U
-
$1,755 U
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