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 pools monthly planning budget is based on operating 25 vehicles, however, for the month of March the university purchased one additional vehicle. The motor pool funishes 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 Over) March Planning Under ActualBudgetBudget 58,500 Miles Autos 50,500 Gasoline Oil, minor repairs, parts Outside repairs Insurance Salaries and benefits Vehicle depreciation Total 5 11,570 S 10,605 S (965) 5,395 1,300 2,120 8,610 5.330 5,050 1.125 2,000 (175) 5.125 S 34,325 S 32,515 S (1,810) The planning budget was based on the tollowing assumptions: д. $0.21 per mile for gasoline b. $0.10 per mile for oil, minor repairs, and parts c. $45 per automobile per month for outside repairs d. $80 per automobile per month for insurance e. $8,610 per month for salaries and benefits f $205 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 pools performance. Required 1. Calculate the spending variances for March. (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 Varian ces For the Month Ended March 31 Gasoline Oil, minor repairs, parts Outside repairs Insurance Salaries and benefits Vehicle depreciation Total

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Answer #1
Flexible Budget
Gasoline 0.21*58500 12285
Oil Minor repair 0.1*58500 5850
Outside repair 45*26 1170
Insurance 80*26 2080
Salaries and Benefit 8610 8610
Vehicle Depreciation 205*26 5330
Actual Variance Flexible Budget
Gasoline 11570 715 F 12285
Oil Minor repair 5395 455 F 5850
Outside repair 1300 130 U 1170
Insurance 2120 40 U 2080
Salaries and Benefit 8610 0 None 8610
Vehicle Depreciation 5330 0 None 5330
Variance
Gasoline 715 F
Oil Minor repair 455 F
Outside repair 130 U
Insurance 40 U
Salaries and Benefit 0 None
Vehicle Depreciation 0 None
Total 1000 F
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