Problem 1: Use the following information to complete A, B, and C.
Laboe 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 2,900 tenant-days, but its actual level of activity was 2,940 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:
Fixed element Variable element
per month pertenant day
Revenue __ $29.50
Wages and salaries $2,300 $6.70
Expendables 600 9.10
Facility expenses 8,400 4.40
Administrative expenses 6,900 0.30
Total expenses $18,200 $20.50
A. The administrative expenses in the planning budget for February would be closest to:
a. $7,814
b. $7,770
c. $7,922
d. $7,782
B. The net operating income in the planning budget for February would be closest to:
a. $7,191
b. $7,391
c. $7,900
d. $8,260
C. The expendables in the flexible budget for February would be closest to:
a. $26,990
b. $27,354
c. $27,021
d. $27,772
Problem 2. Use the following information to solve A, B, and C.
Manago Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 5,300 units, but its actual level of activity was 5,310 units. The company has provided the following data concerning the formulas to be used in its budgeting:|
Fixed element Variable element
per month per unit
Revenue __ $37.80
Wages and salaries $0 $5.50
Expendables $0 13.80
Facility expenses 45,400 1.00
Administrative expenses 21,400 0.80
Total expenses $66,800 $21.10
A. The selling and administrative expenses in the planning budget for March would be closest to:
a. $25,640
b. $26,199
c. $26,248
d. $25,648
B. The net operating income in the planning budget for March would be closest to:
a. $11,705
b. $21,877
c. $21,710
d. $11,749
C. The direct materials in the flexible budget for March would be closest to:
a. $73,278
b. $73,929
d. $73,140
c. $74,208