#2 Witten Corporation is a service company that measures its output by the numbe

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#2

Witten Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.

A total of 27 customers were actually served during January.

The revenue in the company's flexible budget for January would have been closest to:

$145,200

$147,400

$180,900

$178,200

#3

Dinham 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 March, the kennel budgeted for 2,000 tenant-days, but its actual level of activity was 2,040 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March:

Data used in budgeting:

Actual results for March:

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 March would be closest to:

$1,960 F

$1,396 F

$1,960 U

$1,396 U

#4

Pickrel Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.

When the company prepared its planning budget at the beginning of November, it assumed that 27 wells would have been serviced. However, 31 wells were actually serviced during November.

The amount shown for “Servicing materials” in the planning budget for November would have been closest to:

$16,200

$19,000

$18,600

$16,548

Fixed Element per Month Variable Element per Customer Served Revenue $ 6,600 Employee salaries and wages $ 55,100 $ 1,000 Travel expenses $ 600 Other expenses $ 43,100

Explanation / Answer

2) Revenue in flexible budget = 27*6600 = 178200

So answer is d) $178200

3) Overall revenue and spending variance = (35.40-21.30*2040-20800)-6004 = 1960 U

So answer is c) 1960 U

4) Servicing materials in planning budget = 27*600 = 16200

So answer is a) $16200

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