Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Question
Chapter 9, Problem 20P
1.
To determine
Introduction: The difference between the planning budget and the flexible budget is known as activity variance. It arises due to the difference between the planned activity level and the actual activity level.
The reaction of the owner on the variance report.
2.
To determine
Introduction: The difference between the planning budget and the flexible budget is known as activity variance. It arises due to the difference between the planned activity level and the actual activity level.
To prepare: The flexible budget performance report.
3.
To determine
Introduction: The difference between the planning budget and the flexible budget is known as activity variance. It arises due to the difference between the planned activity level and the actual activity level.
To evaluate: The performance of the school.
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TipTop Flight School offers flying lessons at a small municipal airport. The school’s owner and manager has been attempting to evaluate performance and control costs using a variance report that compares the planning budget to actual results. A recent variance report appears below:
TipTop Flight SchoolVariance ReportFor the Month Ended July 31
ActualResults
PlanningBudget
Variances
Lessons
145
140
Revenue
$
33,110
$
32,200
$
910
F
Expenses:
Instructor wages
8,510
8,400
110
U
Aircraft depreciation
4,350
4,200
150
U
Fuel
2,470
1,960
510
U
Maintenance
2,010
1,900
110
U
Ground facility expenses
1,465
1,480
15
F
Administration
3,265
3,340
75
F
Total expense
22,070
21,280
790
U
Net operating income
$
11,040
$
10,920
$
120
F
After several months of using such variance reports, the owner has become frustrated. For example,…
TipTop Flight School offers flying lessons at a small municipal airport. The school’s owner and manager has been attempting to evaluate performance and control costs using a variance report that compares the planning budget to actual results. A recent variance report appears below:
TipTop Flight SchoolVariance ReportFor the Month Ended July 31
Actual Results
Planning Budget
Variances
Lessons
175
170
Revenue
$ 36,640
$ 35,700
$ 940
F
Expenses:
Instructor wages
8,640
8,500
140
U
Aircraft depreciation
6,300
6,120
180
U
Fuel
2,410
1,870
540
U
Maintenance
2,030
1,890
140
U
Ground facility expenses
1,660
1,690
30
F
Administration
3,340
3,430
90
F
Total expense
24,380
23,500
880
U
Net operating income
$ 12,260
$ 12,200
$ 60
F
After several months of using these reports, the owner has become frustrated. For example, she is quite confident that instructor wages were very tightly controlled in July, but the report shows an unfavorable variance.
The…
II. SALES VARIANCE ANALYSIS
The Furniluxe manufactures two types of study desk: one for the residential market, and the other for
the school market. Budgeted and actual operating data for the year 2022 are:
Static Budget
Number of desk sold
Contribution margin
Residential
School
390,000
$39,000,000
210,000
$16,800,000
Total
600,000
$55,800,000
School
Total
580,000
$48,720,000
Actual Results
Residential
Number of desk sold
Contribution margin
232,000
348,000
$20,880,000
$27,840,000
The Furnilixe prepared the budget for 2022 assuming a 15% market share based on total desk sales in
the region. The total desk market was estimated to reach sales of 4,000,000 desks. However, actual
total sales volume was 3,625,000 desks.
Required:
Compute the following variances in terms of contribution margin:
1. Compute the total sales-volume variance. (3%)
2. Compute the sales-mix variance and the sales-quantity variance by type of desk. (7%)
3. Compute the market share variance and the market size…
Chapter 9 Solutions
Managerial Accounting
Ch. 9 - Prob. 1QCh. 9 - What is a flexible budget and how does it differ...Ch. 9 - Prob. 3QCh. 9 - Why is it difficult to interpret a difference...Ch. 9 - What is an activity variance and what does it...Ch. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - Prob. 9QCh. 9 - Prob. 10Q
Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 2F15Ch. 9 - Prob. 3F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 -
L09-1, LO9-2, LO9-3
Adger Corporation is a...Ch. 9 - Prob. 8F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 10F15Ch. 9 - Prob. 11F15Ch. 9 - Prob. 12F15Ch. 9 - Prob. 13F15Ch. 9 - Prob. 14F15Ch. 9 - Prob. 15F15Ch. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 -
EXERCISE 9-3 Revenue and Spending Variances...Ch. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24CCh. 9 - Prob. 25CCh. 9 - Prob. 26C
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- TipTop Flight School offers flying lessons at a small municipal airport. The school's owner and manager has been attempting to evaluate performance and control costs using a variance report that compares the planning budget to actual results. A recent variance report appears below: Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income Revenue Instructor wages. Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Lessons Revenue TipTop Flight School Variance Report For the Month Ended July 31 Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income After several months of using these reports, the owner has become frustrated. For example, she is quite confident that instructor wages were very tightly controlled in July, but the report shows an unfavorable variance. The planning…arrow_forwardCritiquing a Variance Report; Preparing a Performance Report Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system. A report for the company’s Assembly department for the month of march follows: After receiving a copy of this cost report, the supervisor of the assembly department started, “These reports are super. It makes me feel really good to see how well things are going in my department. I can’t understand why those people upstairs complain so much about the reports.” For the last several years, the company’s marketing department has chronically failed to meet the sales goals expressed in the company’s monthly budgets. Required: 1. The company’s president is uneasy about the cost reports and would like you to evaluate their usefulness to the…arrow_forwardTipTop Flight School offers flying lessons at a small municipal airport. The school's owner and manager has been attempting to evaluate performance and control costs using a variance report that compares the planning budget to actual results. A recent variance report appears below: Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Lessons Revenue Expenses: TipTop Flight School Variance Report For the Month Ended July 31 Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income Actual Results After several months of using these reports, the owner has become frustrated. For example, she is quite confident that instructor wages were very tightly controlled in July, but the report shows an unfavorable variance.…arrow_forward
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