Farrar University offers an extensive continuing education program in many citie

Question

Farrar 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 operated with 20 vehicles until February. when an additional automobile was acquired at the request of the university administration. 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. Each year, the supervisor of the motor pool prepares annual budget, which is reviewed by the university and approved after suitable modifications. The following cost control report shows actual operating costs for March of the current year compared to one-twelfth of the annual budget. The annual budget was based on the following assumptions: $0, 18 per mile for gasoline. $0, 07 per mile for oil, minor repairs, and parts. $348 per automobile per year for outside repairs. $780 per automobile per year for insurance. $8, 610 per month for salaries and benefits. $2, 280 per automobile per year 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: Complete the performance report for March based on a flexible budget that shows spending variances. (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.)

Explanation / Answer

For the month ended MARCH 31 Annual Budget Flexible Actual Spending Assumptions Budget Results Variances Budget - actual Miles 56800 Autos 21 Gasoline 0.18 per mile 10224 9750 474 Favourable oil, minor repairs, parts 0.07 per mile 3976 3755 221 Favourable Outside repairs 348 per autmobile per year 609 755 -146 unfavourable Insurance 780 per autmobile per year 1365 1420 -55 unfavourable Salaries and benefits 8610 pm 8610 8610 0 no variance Vehicle depriciation 2280 per autmobile per year 3990 3990 0 no variance Total Total 28774 28280 494 Favourable working Gasoline 0.18 * 56800 oil, minor repairs, parts 0.07 * 56800 Outside repairs 348/12*21 Insurance 780*12/21 Salaries and benefits 8610 Vehicle depriciation 2280/12*21

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