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Cost Accounting - Flexible Budgets Problems

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1. Baker's Urban Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for December was based on 2,400 meals, but the diner actually served 2,300 meals. The diner's director has provided the following cost data to use in the budget: groceries, $2.00 per meal; kitchen operations, $5,100 per month plus $1.85 per meal; administrative expenses, $2,900 per month plus $0.65 per meal; and fundraising expenses, $1,000 per month.

On the basis of the given information, show the activity variances for the following:

Each of the expenses
Total expenses for December

In addition, label each variance as favourable (F) or unfavourable (U).

2. Jackson Corporation bases its budgets on the number of customers served. During September, the company planned to serve 24,000 customers, but actually served 19,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:

Revenue: $2.90q
Wages and salaries: $24,700 + $0.90q
Supplies: $0.40q
Insurance: $4,900
Miscellaneous: $2,800 + $0.10q

On the basis of the given information, show the company's activity variances for September. In addition, indicate in each case whether the variance is favourable (F) or unfavourable (U).

Support your responses with examples.

Cite any sources in APA format.

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Solution Summary

The problem set deals with issues under accounting and variance analysis.