Question

1)Which of the following may appear on a flexible budget performance report?

Multiple Choice

An unfavorable spending variance.

A favorable revenue variance.

An unfavorable activity variance.

All of the above may appear on a flexible budget performance report.

2) Rients Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for October.

	Fixed Element per Month			Variable Element per Customer Served		Actual Total for October
Revenue				$	4,100	$	182,900
Employee salaries and wages	$	42,300		$	1,300	$	98,800
Travel expenses				$	700	$	30,500
Other expenses	$	31,500				$	31,900

When the company prepared its planning budget at the beginning of October, it assumed that 39 customers would have been served. However, 44 customers were actually served during October.

The spending variance for “Other expenses” for October would have been closest to:

Multiple Choice

$400 F

$3,625 U

$400 U

$3,625 F

Answer 1

1	1) Which of the following may appear on a flexible budget performance report?
	Ans) Option (D) All of the above may appear on a flexible budget performance report.
2	Spending variance for other expenses
	Fixed cost is not depend on the production or volume So while calculating the variance we no need to consider the Expected production/Service and Actual service
	Spending variance for other expenses (Fixed cost =fixed cost as per flexible budget- Actual total fixed cost)
	$(31,500-$31,900) = -$400
	Since Actual fixed cost of other expenses is higher than the Flexible budgeted fixed cost so the Variance of $400 is Unfavourable Since Excess fixed cost is loss
	Ans) Option (C.) $400U