Question

Please pay close attention to decimal place instructions and rounding. Thank you!

Boyne University offers an extensive continuing education program in many cities throughout the state. For the convenience of its faculty and administrative staff and to save costs, the university operates a motor pool. The motor pool’s monthly planning budget is based on operating 16 vehicles; however, for the month of March the university purchased one additional vehicle. The motor pool furnishes gasoline, oil, and other supplies for its automobiles. A mechanic does routine maintenance and minor repairs. Major repairs are performed at a nearby commercial garage.

The following cost control report shows actual operating costs for March of the current year compared to the planning budget for March.

  

Boyne University Motor Pool Cost Control Report For the Month Ended March 31
	March Actual			Planning Budget			(Over) Under Budget
Miles		58,900			50,900
Autos		17			16
Gasoline	$	13,700		$	12,725		$	(975	)
Oil, minor repairs, parts		7,560			7,126			(434	)
Outside repairs		960			784			176
Insurance		1,465			1,344			(121	)
Salaries and benefits		8,610			8,610			0
Vehicle depreciation		3,553			3,344			(209	)
Total	$	35,848		$	33,933		$	(1,915	)

The planning budget was based on the following assumptions:

$0.25 per mile for gasoline.

$0.14 per mile for oil, minor repairs, and parts.

$49 per automobile per month for outside repairs.

$84 per automobile per month for insurance.

$8,610 per month for salaries and benefits.

$209 per automobile per month for depreciation.

The supervisor of the motor pool is unhappy with the report, claiming it paints an unfair picture of the motor pool’s performance.

Required:

1. Complete the performance report for March based on a flexible budget that shows spending variances. (Round "per mile" answers to 2 decimal places. 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.)

Boyne University Motor Pool
Spending Variances
For the Month Ended March 31
	Planning Budget Assumptions		Actual Results	Flexible Budget	Spending Variances
Miles			58,900
Autos			17
Gasoline		per mile	$13,700
Oil, minor repairs, parts		per mile	7,560
Outside repairs		per automobile	960
Insurance		per automobile	1,465
Salaries and benefits		per month	8,610
Vehicle depreciation		per automobile	3,553
Total			$35,848

Answer 1

Solution 1:

Boyne University Motor Pool
Spending Variances
For the Month Ended March 31
Particulars	Planning Budget Assumptions		Actual Results	Flexible Budget	Spending Variances
Miles			58,900	58,900
Autos			17	17
Gasoline	$0.25	per mile	$13,700.00	$14,725.00	$1,025.00	F
Oil, minor repairs, parts	$0.14	per mile	$7,560.00	$8,246.00	$686.00	F
Outside repairs	$49.00	per automobile	$960.00	$833.00	$127.00	U
Insurance	$84.00	per automobile	$1,465.00	$1,428.00	$37.00	U
Salaries and benefits	$8,610.00	per month	$8,610.00	$8,610.00	$0.00	None
Vehicle depreciation	$209.00	per automobile	$3,553.00	$3,553.00	$0.00	None
Total			$35,848.00	$37,395	$1,547.00	F