Assignment
I. Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company's planning budget for May appears below:
|
Puget Sound Divers
Planning Budget
For the Month Ended May 31
|
|
Budgeted diving-hours (q)
|
|
250
|
|
Revenue ($390.00q)
|
$
|
97,500
|
|
Expenses:
|
|
|
|
Wages and salaries ($11,900 + $122.00q)
|
|
42,400
|
|
Supplies ($4.00q)
|
|
1,000
|
|
Equipment rental ($2,300 + $23.00q)
|
|
8,050
|
|
Insurance ($4,200)
|
|
4,200
|
|
Miscellaneous ($520 + $1.46q)
|
|
885
|
|
Total expense
|
|
56,535
|
|
Net operating income
|
$
|
40,965
|
Required:
During May, the company's activity was actually 240 diving-hours. Complete the following flexible budget for that level of activity.
II. Flight Café is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company's planning budget for July appears below:
|
Flight Café
Planning Budget
For the Month Ended July 31
|
|
Budgeted meals (q)
|
|
21,000
|
|
Revenue ($3.80q)
|
$
|
79,800
|
|
Expenses:
|
|
|
|
Raw materials ($2.20q)
|
|
46,200
|
|
Wages and salaries ($6,200 + $0.20q)
|
|
10,400
|
|
Utilities ($1,900 + $0.05q)
|
|
2,950
|
|
Facility rent ($3,100)
|
|
3,100
|
|
Insurance ($2,700)
|
|
2,700
|
|
Miscellaneous ($700 + $0.10q)
|
|
2,800
|
|
Total expense
|
|
68,150
|
|
Net operating income
|
$
|
11,650
|
In July, 22,000 meals were actually served. The company's flexible budget for this level of activity appears below:
|
Flight Café
Flexible Budget
For the Month Ended July 31
|
|
Budgeted meals (q)
|
|
22,000
|
|
Revenue ($3.80q)
|
$
|
83,600
|
|
Expenses:
|
|
|
|
Raw materials ($2.20q)
|
|
48,400
|
|
Wages and salaries ($6,200 + $0.20q)
|
|
10,600
|
|
Utilities ($1,900 + $0.05q)
|
|
3,000
|
|
Facility rent ($3,100)
|
|
3,100
|
|
Insurance ($2,700)
|
|
2,700
|
|
Miscellaneous ($700 + $0.10q)
|
|
2,900
|
|
Total expense
|
|
70,700
|
|
Net operating income
|
$
|
12,900
|
Required:
1. Compute the company's activity variances for July.(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.)
III. QuilceneOysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,900 pounds of oysters in August. The company's flexible budget for August appears below:
|
QuilceneOysteria
Flexible Budget
For the Month Ended August 31
|
|
Actual pounds (q)
|
|
7,900
|
|
Revenue ($4.25q)
|
$
|
33,575
|
|
Expenses:
|
|
|
|
Packing supplies ($0.25q)
|
|
1,975
|
|
Oyster bed maintenance ($3,200)
|
|
3,200
|
|
Wages and salaries ($2,300 + $0.45q)
|
|
5,855
|
|
Shipping ($0.55q)
|
|
4,345
|
|
Utilities ($1,260)
|
|
1,260
|
|
Other ($490 + $0.01q)
|
|
569
|
|
Total expense
|
|
17,204
|
|
Net operating income
|
$
|
16,371
|
The actual results for August appear below:
|
QuilceneOysteria
Income Statement
For the Month Ended August 31
|
|
Actual pounds
|
7,900
|
|
Revenue
|
26,700
|
|
Expenses:
|
|
|
Packing supplies
|
2,145
|
|
Oyster bed maintenance
|
3,060
|
|
Wages and salaries
|
6,265
|
|
Shipping
|
4,075
|
|
Utilities
|
1,070
|
|
Other
|
1,189
|
|
Total expense
|
17,804
|
|
Net operating income
|
8,896
|
Required:
Compute the company's revenue and spending variances for August. (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.)
IV. Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below:
|
|
Division
|
|
|
Queensland
|
New South Wales
|
|
Sales
|
$
|
1,080,000
|
$
|
2,385,000
|
|
Average operating assets
|
$
|
600,000
|
$
|
530,000
|
|
Net operating income
|
$
|
70,200
|
$
|
83,475
|
|
Property, plant, and equipment (net)
|
$
|
241,000
|
$
|
191,000
|
Required:
1. Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover. (Round your answers to 2 decimal places.)
2. Which divisional manager seems to be doing the better job?
Queensland division
New South Wales division
V. A planning budget is prepared before the period begins and is valid for whatever the actual level of activity turns out to be.
True
False
VI. Comparing a static planning budget to actual costs is a good way to assess whether variable costs are under control.
True
False
VII. A balanced scorecard consists of an integrated set of performance measures that are derived from and support a company's strategy.
True
False