ADDITIONAL RQ Ch8

Student: ___________________________________________________________________________
Spraque 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 $40,520 per month plus $2,733 per flight
plus $11 per passenger. The company expected its activity in June to be 71 flights and 207 passengers, but the
actual activity was 70 flights and 205 passengers. The actual cost for plane operating costs in June was
$239,580.

1. The activity variance for plane operating costs in June would be closest to:
A. $2,755 U
B. $2,755 F
C. $2,740 F
D. $2,740 U

Luc Corporation manufactures and sells a single product. The company uses units as the measure of activity in
its budgets and performance reports. During February, the company budgeted for 5,000 units, but its actual level
of activity was 4,950 units. The company has provided the following data concerning the formulas used in its
budgeting and its actual results for February:

2. The selling and administrative expenses in the planning budget for February would be closest to:
A. $30,490
B. $30,495
C. $30,500
D. $30,190

Worden Hospital bases its budgets on patient-visits. The hospital's static budget for February appears below:

3. The total fixed cost at the activity level of 4,700 patient-visits per month should be:
A. $162,620
B. $148,780
C. $93,060
D. $85,140

Murphree Clinic uses client-visits as its measure of activity. During April, the clinic budgeted for 3,300 clientvisits, but its actual level of activity was 3,350 client-visits. The clinic has provided the following data
concerning the formulas used in its budgeting and its actual results for April:

4. The net operating income in the flexible budget for April would be closest to:
A. $20,115
B. $19,519
C. $14,425
D. $13,550

Tosta Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted
as one tenant-day. During May, the kennel budgeted for 2,100 tenant-days, but its actual level of activity was
2,050 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting
and its actual results for May:

5. The net operating income in the flexible budget for May would be closest to:
A. $9,140
B. $8,420
C. $11,626
D. $12,200

Springmeyer Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 2,900
client-visits, but its actual level of activity was 2,940 client-visits. The clinic has provided the following data
concerning the formulas used in its budgeting and its actual results for August:

6. The personnel expenses in the planning budget for August would be closest to:
A. $69,600
B. $73,800
C. $70,560
D. $73,200

ADDITIONAL RQ Ch8 Key

Spraque 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 $40,520 per month plus $2,733 per flight
plus $11 per passenger. The company expected its activity in June to be 71 flights and 207 passengers, but the
actual activity was 70 flights and 205 passengers. The actual cost for plane operating costs in June was
$239,580.

Brewer - Chapter 08

1. The activity variance for plane operating costs in June would be closest to:
A. $2,755 U
B. $2,755 F
C. $2,740 F
D. $2,740 U

Since the flexible budget expense is less than the planning budget, the variance is favorable (F)

AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Application
Brewer - Chapter 08 #232
Learning Objective: 4
Learning Objective: 5
Level: Easy

Luc Corporation manufactures and sells a single product. The company uses units as the measure of activity in
its budgets and performance reports. During February, the company budgeted for 5,000 units, but its actual level
of activity was 4,950 units. The company has provided the following data concerning the formulas used in its
budgeting and its actual results for February:

Brewer - Chapter 08

2. The selling and administrative expenses in the planning budget for February would be closest to:
A. $30,490
B. $30,495
C. $30,500
D. $30,190
$29,500 + $0.20 5,000 = $30,500

AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Application
Brewer - Chapter 08 #153
Learning Objective: 1
Level: Medium

Worden Hospital bases its budgets on patient-visits. The hospital's static budget for February appears below:

Brewer - Chapter 08

3. The total fixed cost at the activity level of 4,700 patient-visits per month should be:
A. $162,620
B. $148,780
C. $93,060
D. $85,140
Total fixed cost = $33,110 + $52,030 = $85,140

AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Application
Brewer - Chapter 08 #158
Learning Objective: 1
Level: Easy

Murphree Clinic uses client-visits as its measure of activity. During April, the clinic budgeted for 3,300 clientvisits, but its actual level of activity was 3,350 client-visits. The clinic has provided the following data
concerning the formulas used in its budgeting and its actual results for April:

Brewer - Chapter 08

4. The net operating income in the flexible budget for April would be closest to:
A. $20,115
B. $19,519
C. $14,425
D. $13,550

AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Application
Brewer - Chapter 08 #104
Learning Objective: 1
Level: Medium

Tosta Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted
as one tenant-day. During May, the kennel budgeted for 2,100 tenant-days, but its actual level of activity was
2,050 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting
and its actual results for May:

Brewer - Chapter 08

5. The net operating income in the flexible budget for May would be closest to:
A. $9,140
B. $8,420
C. $11,626
D. $12,200

AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Application
Brewer - Chapter 08 #125
Learning Objective: 1
Level: Medium

Springmeyer Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 2,900
client-visits, but its actual level of activity was 2,940 client-visits. The clinic has provided the following data
concerning the formulas used in its budgeting and its actual results for August:

Brewer - Chapter 08

6. The personnel expenses in the planning budget for August would be closest to:
A. $69,600
B. $73,800
C. $70,560
D. $73,200
$29,700 + $15 2,900 = $73,200

AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Bloom's: Application
Brewer - Chapter 08 #163
Learning Objective: 1
Level: Medium

ADDITIONAL RQ Ch8 Summary

Category

# of Questions

AACSB: Analytic

AICPA BB: Critical Thinking

AICPA FN: Measurement

Bloom's: Application

Brewer - Chapter 08

12

Learning Objective: 1

Learning Objective: 4

Learning Objective: 5

Level: Easy

Level: Medium