UNIVERSITYFLEXIBLEBUDGETING

The University of Pottersville offers an extensive continuing education program in many citiesthroughout the country. For the convenience of its faculty and administrative staff and to savecosts,theuniversityoperatesamotorpool.

The motor pool operated with 25 vehicles until February of this year, when an additionalautomobile wasacquired.Themotorpoolfurnishesgasoline,oil,andothersuppliesforthecarsand hires one mechanic who does routine maintenance and minor repairs. Major repairs aredone atanearbycommercialgarage.Asupervisormanagestheoperations.

Each year the supervisor prepares an operating budget, informing university management of thefunds needed to operate the pool. Depreciation on the automobiles is recorded in the budget inorder to determine the cost per kilometre.The schedule below presents the annual budgetapproved bytheuniversity.

TheactualcostsforMarcharecomparedwithone-twelfthof theannual budget.

Fuel [gasoline] 33,125 15,900 {2,055} Oil, minor repairs, parts, and supplies 30,000 2,500 2,540 (40} 175 m (200} {76} - m (2,197) Total kilometres 125,000 Number of automobiles 0 2313 Total Cost per kilometre