Farrar University offers an extensive continuing education program in many citie

Question

Farrar 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 operated with 21 vehicles until February, when an additional automobile was acquired at the request of the university administration. 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. Each year, the supervisor of the motor pool prepares an annual budget, which is reviewed by the university and approved after suitable modifications. The following cost control report shows actual operating costs for March of the current year compared to one-twelfth of the annual budget. Farrar University Motor Pool Cost Control Report For the Month Ended March 31 Annual Budget Monthly Budget (1/12 of Annual Budget) March Actual (Over) Under Budget Miles 597,600 49,800 57,800 Autos 21 21 22 Gasoline $ 89,640 $ 7,470 $ 8,400 $ (930) Oil, minor repairs, parts 89,640 7,470 7,800 (330) Outside repairs 9,828 819 990 (171) Insurance 21,924 1,827 1,950 (123) Salaries and benefits 103,320 8,610 8,610 0 Vehicle depreciation 53,424 4,452 4,664 (212) Total $ 367,776 $ 30,648 $ 32,414 $ (1,766) The annual budget was based on the following assumptions: a. $0.15 per mile for gasoline. b. $0.15 per mile for oil, minor repairs, and parts. c. $468 per automobile per year for outside repairs. d. $1,044 per automobile per year for insurance. e. $8,610 per month for salaries and benefits. f. $2,544 per automobile per year 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. Required: 1. Complete the performance report for March based on a flexible budget that shows spending variances. (Round "per mile" answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Explanation / Answer

Farrar University Motor Pool Cost Control Report For the Month Ended March 31 Annual Budget    Monthly Budget (1/12 of Annual Budget) March Actual (Over) Under Budget Variance as per fixed budget Standard amts. for actual as perflexible budget Spending Variance 1 2 3 4 5 6=Amt./3*4 7=6-4 Miles 597600 49800 57,800 Autos 21 22 22 Gasoline 89640 7470 8400 -930 8670 270 F Oil, minor repairs, parts 89640 7470 7800 -330 8670 870 F Outside parties 9828 819 990 -171 819 -171 U Insurance 21924 1827 1950 -123 1827 -123 U Salaries & benefits 103320 8610 8610 0 8610 0 No Vehicle depn. 53424 4452 4664 -212 4452 -212 U Total 367776 30648 32414 -1766 33048 634 F

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