16. For July, White Corporation has budgeted production of 8,250 units. Each uni

Question

16. For July, White Corporation has budgeted production of 8,250 units. Each unit requires 0.20 direct labor-hours at a cost of $5.80 per direct labor-hour. How much will White Corporation budget for labor in July?

18.

Which of the following comparisons best isolates the impact that changes in operating efficiency have on performance?

Static planning budget and flexible budget

Static planning budget and actual results

Flexible budget and actual results

Master budget and static planning budge

20. Borunda Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $40,400 per month plus $2,236 per flight plus $10 per passenger. The company expected its activity in July to be 157 flights and 318 passengers, but the actual activity was 162 flights and 313 passengers. The actual cost for plane operating costs in July was $388,500. The activity variance for plane operating costs in July would be closest to:

21.Shelby Boat Wash's cost formula for its cleaning equipment and supplies is $2,950 per month plus $28 per boat. For the month of September, the company planned for activity of 61 boats, but the actual level of activity was 23 boats. The actual cleaning equipment and supplies for the month was $3,642.

The activity variance for cleaning equipment and supplies in September would be closest to:

Explanation / Answer

16) White Corporation budget for labor in July = 8250 units x 0.2 hours x $0.85 per hour = $1,402.5 Answer

18) The following comparisons best isolates the impact that changes in operating efficiency have on performance:

- Flexible budget and actual results. And this is because the flexible budget is adusted for actual activity for comparison.

20) Planned Budget cost for plane operating costs in July = 40400 + (2236*57) + (10*318) = $394,632

Flexible cost = 40400 + (2236*62) + (10*313) = 405762

Activity Variance = Flexible cost - Planned cost = 405,762 - 394,632 = $11,130. Unfavourable

21) Planned Budget cost for cleaning equipment and supplies = 2950 + (21*61) = $4,231

Flexible cost = 2950 + (21*23) = 3433   

Activity Variance = Flexible cost - Planned cost = 4231 - 3433 = $798 favourable

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