Waterloo County provides free weekly homemaking services for qualified shut-in elderly. The budget allocations for the program were $123,600 in 20x6 and $149,116 in 20x7. The director of the program is responsible for providing as many home visits as possible within the budget.
20x6 20x7
Homemaker wages $ 60,000 $ 75,200
Cleaning supplies 8,600 13,416
Transportation 5,000 6,500
Program administration 50,000 54,000
Total Costs $123.600 $149,116
Number of home visits 2,060 2,472
Average Cost per Home Visit $60 $60
The homemakers, who are hourly employees hired as needed, did not receive an increase in wages in 20x6 or 20x7. The prices of cleaning supplies increased about 5% from 20x6 to 20x7. Transportation is provided by the homemakers, who are reimbursed per kilometre travelled. Program administration consists of the salary of the program director and her assistant, plus discretionary expenditures such as travel to conferences.
a)The County had planned to allocate the same amount in 2007 as was allocated for 2006. However, actual results for 20x7 were about $30,000 higher than expected. The director of the program explained that costs had increased because the number of visits was higher. Prepare a flexible budget for 20x7 using the results for 20x6 as a benchmark.
b)Calculate budget variances.
c)How many more home visits could have been made had costs been under control during 20x7?
d)Which variances would you investigate? Explain your reasoning.

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The Answer of Waterloo County provides free weekly homemaking services for qualified shut-in elderly. The budget allocations for the program were $123,600 in 20x6 and $149,116 in 20x7. The director of the program is responsible for providing as many home visits as possible within the budget.
20x6 20x7
Homemaker wages $ 60,000 $ 75,200
Cleaning supplies 8,600 13,416
Transportation 5,000 6,500
Program administration 50,000 54,000
Total Costs $123.600 $149,116
Number of home visits 2,060 2,472
Average Cost per Home Visit $60 $60
The homemakers, who are hourly employees hired as needed, did not receive an increase in wages in 20x6 or 20x7. The prices of cleaning supplies increased about 5% from 20x6 to 20x7. Transportation is provided by the homemakers, who are reimbursed per kilometre travelled. Program administration consists of the salary of the program director and her assistant, plus discretionary expenditures such as travel to conferences.
a)The County had planned to allocate the same amount in 2007 as was allocated for 2006. However, actual results for 20x7 were about $30,000 higher than expected. The director of the program explained that costs had increased because the number of visits was higher. Prepare a flexible budget for 20x7 using the results for 20x6 as a benchmark.
b)Calculate budget variances.
c)How many more home visits could have been made had costs been under control during 20x7?
d)Which variances would you investigate? Explain your reasoning.

Waterloo County Provides Free Weekly Homemaking Services for Qualified Shut-In