Reference no: EM133115521
Question - 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 19 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.
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Boyne University Motor Pool Cost Control Report For the Month Ended March 31
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March Actual
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Planning Budget
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(Over) Under Budget
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Miles
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58,600
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50,600
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Autos
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20
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19
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Gasoline
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$ 12,105
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$ 11,132
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$ (973)
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Oil, minor repairs, parts
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5,900
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5,566
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(334)
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Outside repairs
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1,050
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874
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(176)
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Insurance
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1,660
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1,539
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(121)
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Salaries and benefits
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8,610
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8,610
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0
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Vehicle depreciation
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4,120
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3,914
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(206)
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Total
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$ 33,445
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$ 31,635
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$ (1,810)
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The planning budget was based on the following assumptions:
1. $0.22 per mile for gasoline.
2. $0.11 per mile for oil, minor repairs, and parts.
3. $46 per automobile per month for outside repairs.
4. $81 per automobile per month for insurance.
5. $8,610 per month for salaries and benefits.
6. $206 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 - Calculate the spending variances for March.
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