ANSWER: Flexible budget for gasoline costs: 7,700 Flexible budget for oil costs:

Question

ANSWER:
Flexible budget for gasoline costs: 7,700

Flexible budget for oil costs: 1,400

Flexible budget for depreciation: 1,976

How do you get to the answer?

08d output was 6,800 units. 8-40 University Flexible Budgeting Inverness University offers an extensive continuing education program in many cities throughout Scotland. For the convenience of its faculty and administrative staff and also to save costs, the university operates a motor pool. The motor pool operated with 25 vehicles until February of this year, when an additional automobile was acquired. The motor pool furnishes gasoline, oil, and other supplies for the cars and hires one mechanic who does routine maintenance and minor repairs. Major repairs are done at a nearby garage. A supervisor manages the operations. Each year the supervisor prepares an operating budget, informing university management of the funds needed to operate the pool. Depreciation on the automobiles is recorded in budget in order to determine the cost per kilometer. The schedule below presents the annual budget approved by the university. The actual costs for March are compared with one-twelfth of the annual budget: University Motor Pool Budget Report for March Annual One-Month Budget Budget £6,875 1,250 225 400 1,800 1,900 £ 149,400 £12,450 March Unfav (Fav) £8,200 £1,325 50 50 (175) Actual Gasoline Oil, minor repairs, parts, and supplies Outside repairs Insurance Salaries and benefits Depreciation Total £ 82,500 15,000 2,700 4,800 21,600 22.800 1,300 416 1,800 76 £ 13,742 £1,292 Total kilometers Cost per kilometer Number of automobiles 1,500,000 125,000 £.0996 £.0996 25 140,000 £ 0.982 26 25 e monthly report comparing budget and actual costs for March. The supervisor is unhappy with th She claims it presents her performance unfairly 1. Create a flexible budget report for the Motor Pool department for March

Explanation / Answer

University Motor Pool Flexible Budget for the Month Master Budget Flexible Budget Actual Output Variance U/F 125000 140000 140000 (125000*Cost Factors) (125000*Cost Factors) Gasoline 6875 7700 8200 -500 Unfavourable Oil, Minor Parts Etc 1250 1400 1300 100 Favourable Outside Repairs 225 252 50 202 Favourable Insurance 400 400 416 -16 Unfavourable Salaries & Benefits 1800 1800 1800 0 - Depreciation 1900 1976 1976 0 - Total Total 12450 13528 13742 -214 Unfavourable Particulars Type of cost Annual Cost Cost Driver(A) Divisible Factor(B) Cost Factor(A/B) Gasoline Variable 82500 Total KM 1500000 0.055 Per KM Oil, Minor Parts Etc Variable 15000 Total KM 1500000 0.01 Per KM Outside Repairs Variable 2700 Total KM 1500000 0.0018 Per KM Insurance Fixed 4800 Months 12 400 Per Month Salaries & Benefits Fixed 21600 Months 12 1800 Per Month Depreciation Fixed 22800 No of Vehicles (25*12) 76 Per Vehicle Per Month 149400

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