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 22 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 Actual Budget 56,600 48,600 23 22 (Over) Under Budget Miles Autos $ Gasoline Oil, minor repairs, parts Outside repairs Insurance Salaries and benefits Vehicle depreciation Total $10,670 4,710 770 1,510 8,610 4,324 $30,594 $ 9,720 4,374 594 1,386 8,610 4,136 $28,820 (950) (336) (176) (124) $ (188) (1,774) The planning budget was based on the following assumptions: a. $0.20 per mile for gasoline. b. $0.09 per mile for oil, minor repairs, and parts. c. $27 per automobile per month for outside repairs. d. $63 per automobile per month for insurance. e. $8.610 per month for salaries and benefits. f. $188 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. Calculate the spending variances for March. (Indicate the effect of each varlance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (I.e., zero varlance). Input all amounts as positive values.) Boyne University Motor Pool Spending Variances For the Month Ended March 31 Gasoline Oil, minor repairs, parts Outside repairs Insurance Salaries and benefits Vehicle depreciation Total

Answer 1

Spending variances
Gasoline	650	F
Oil,minor repairs, parts	384	F
Outside repairs	149	U
Insurance	61	U
Salaries and benefits	0	None
Vehicle depreciation	0	None
Total	824	F

Workings:
	Actual	Flexible budget	Spending variances
Miles	56600	56600
Autos	23	23
Gasoline	10670	11320	650	F
Oil,minor repairs, parts	4710	5094	384	F
Outside repairs	770	621	149	U
Insurance	1510	1449	61	U
Salaries and benefits	8610	8610	0	None
Vehicle depreciation	4324	4324	0	None
Total	30594	31418	824	F
	Flexible budget
Gasoline	11320	=56600*0.20
Oil,minor repairs, parts	5094	=56600*0.09
Outside repairs	621	=27*23
Insurance	1449	=63*23
Salaries and benefits	8610
Vehicle depreciation	4324	=188*23