Topics: Budget, Childbirth, Wage Pages: 2 (404 words) Published: May 2, 2015
﻿1.
Danoff Midwifery's cost formula for its wages and salaries is \$1,540 per month plus \$497 per birth. For the month of March, the company planned for activity of 112 births, but the actual level of activity was 107 births. The actual wages and salaries for the month was \$56,850. The activity variance for wages and salaries in March would be closest to:

A.
\$2,485 U

B.
\$354 U

C.
\$2,485 F

D.
\$354 F

Solution: C
(1,540 * 1) + (497 * 112) = 57,204 (Planned)
(1,540 * 1) + (497 * 107) = 54,719 (Actual)
57,204 – 54,719 = 2,485 F
2.
Dus Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is \$400 per month plus \$89 per job plus \$10 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in March to be 11 jobs and 81 meals, but the actual activity was 7 jobs and 76 meals. The actual cost for catering supplies in March was \$1,810. The activity variance for catering supplies in March would be closest to:

A.
\$406 U

B.
\$406 F

C.
\$379 F

D.
\$379 U

Solution: B

(400 * 1) + (89 * 11) + (10 * 81) = 2,189 (Planning)
(400 * 1) + (89 * 7) + (10 * 76) = 1,783 (Actual)
2,189 – 1,783 = 406 F
Cost: Planning > Flexible > Actual -> Favorable
3.
Loggin Midwifery's cost formula for its wages and salaries is \$2,380 per month plus \$231 per birth. For the month of April, the company planned for activity of 100 births, but the actual level of activity was 102 births. The actual wages and salaries for the month was \$25,510. The spending variance for wages and salaries in April would be closest to:

A.
\$30 F

B.
\$432 U

C.
\$30 U

D.
\$432 F

Solution: D

(2380 * 1) + (231 * 102) = 25,942 (Planned)
25,942 – 25,510 = 432 F

4.
Randt Footwear Corporation's flexible budget cost formula for supplies, a variable...