1.Paradiso Medical Clinic measures its activity in terms of patient-visits. Last
ID: 2463202 • Letter: 1
Question
1.Paradiso Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,120 patient-visits and the actual level of activity was 1,110 patient-visits. The cost formula for administrative expenses is $3.60 per patient-visit plus $20,000 per month. The actual administrative expense was $21,100. In the clinic's performance report for last month, the spending variance for administrative expenses was:
A.$36 F
B.$1,120 U
C.$2,896 F
D.$2,932 F
2.Gandrud 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 June, the kennel budgeted for 2,600 tenant-days, but its actual level of activity was 2,580 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:
The food and supplies in the flexible budget for June would be closest to:
A.$37,569
B.$36,993
C.$37,320
D.$37,600
3.The Fischer Corporation uses a standard costing system. The following data have been assembled for December:
The standard hours allowed for December's production is:
A.5,100 hours
B.4,400 hours
C.4,750 hours
D.5,450 hours
What is the labor efficiency variance for the month?
A.$19,737 F
B.$19,737 U
C.$16,029 F
D.$16,497 F
5.The following labor standards have been established for a particular product:
What is the labor rate variance for the month?
A.$2,877 F
B.$4,246 F
C.$4,246 U
D.$1,295 F
Fixed element
per month Variable
element per
tenant-day Revenue $37.10 Wages and salaries $3,400 $7.30 Food and supplies 1,200 14.00 Facility expenses 9,600 2.60 Administrative expenses 7,700 0.30 Total expenses $21,900 $24.20
Explanation / Answer
Part 1
VOH Spending Variance = ( SR AR ) × AU
Where,
SR is the standard variable overhead rate
AR is the actual variable overhead rate
AU are the actual units of allocation base
= ( 20000+3.6* 1110) – 21100
= 2896 ( F)
The answer is c
Part 2
Flexible Budget = Fixed Cost + Variable cost per unit * q
= 1200 + (14 * 2580)
= $ 37320
The answer is c
***** Here variable cost per unit and fixed cost of only food and suppliers are taken.
Part 3
Labor Efficiency Variance = (Standard hours for actual output – Actual hours) * Standard Rate
-2800 = (Standard hours for actual output – 5100) * 8
Standard hours for actual output =4750
The answer is c
Part 4
Labor Efficiency Variance = (Standard hours for actual output – Actual hours) * Standard Rate
= (900*10.3 - 8100) * 14.1
= 16497 (F)
The answer is d
Standards hours for actual output = Actual Hours * Standard Rate
= 900*10.3 = 9270
Part 5
Labor Rate Variance = (Standard Rate – Actual Rate) * Actual hours
= ( 14.05 – 50690/3700 ) * 3700
= 1295 (F)
The answer is d
VOH Spending Variance = ( SR AR ) × AU
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