Boyne University offers an extensive continuing education program in many cities

Question

Boyne 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's monthly planning budget is based on operating 19 vehicles; however, for the month of March the university purchased one additional vehicle. 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. The following cost control report shows actual operating costs for March of the current year compared to the planning budget for March. Boyne University Motor Pool Cost Control Report For the Month Ended March 31 March Planning (Over) Under Budget 50,600 Actual Budget 58,600 20 Miles Autos Gasoline Oil, minor repairs, parts Outside repairs Insurance Salaries and benefits Vehicle depreciation Total 12,105 11,132 (973) 5,566 5,900 1,050 1,660 8,610 4,120 874 176 (121) 1,539 8,610 3,914 206 1,810 33,445 31,635 The planning budget was based on the following assumptions a. $0.22 per mile for gasoline b. $0.11 per mile for oil, minor repairs, and parts. c. $46 per automobile per month for outside repairs. d. $81 per automobile per month for insurance e. $8,610 per month for salaries and benefits f. $206 per automobile per month 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 perfomance 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.) Boyne University Motor Pool Spending Variances For the Month Ended March 31 Planning Budget Assumptions Actual Results Flexible Budget Spending Variances Miles Autos Gasoline Oil, minor repairs, parts Outside repairs Insurance Salaries and benefits Vehicle depreciation Total per mile per mile per automobile per automobile per month per automobile 58,600 20 $ 12,105 5,900 1,050 1,660 8,610 4,120 $ 33,445

Explanation / Answer

Performance budget :

Planning budget assumptions Actual results Flexible budget Spending variance Miles 58600 58600 Autos 20 20 Gasoline 0.22 per mile 12105 12892 787 F Oil, minor repairs, parts 0.11 per mile 5900 6446 546 F Outside repairs 46 per automobile 1050 920 130 U Insurance 81 per automobile 1660 1620 40 u Salaries and benefits 8610 per month 8610 8610 0 None Vehicle depreciation 206 per automobile 4120 4120 0 None Total 33445 34608 1163 F

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