Question

Flight Café Planning Budget For the Month Ended July 31 Budgeted meals (9) 20,000 $76,000 Revenue ($3.80g) Expenses: Raw materials ($2.10g) Wages and salaries ($6,000 + $0.209) Utilities ($1,800 + $0.059) Facility rent ($3,500) Insurance ($2,100) Miscellaneous ($800 + $0.109) Total expense Net operating income 42,000 10,000 2,800 3,500 2,100 2,800 63,200 $12,800 ces In July, 21,000 meals were actually served. The company's flexible budget 1 Flight Café Flexible Budget For the Month Ended July 31 Budgeted meals (9) 21,000 $ 79,800 Revenue ($3.809) Expenses : Raw materials ($2.109) Wages and salaries ($6,000+ $0.209) Utilities ($1,800 + $0.05g) Facility rent ($3,500) Insurance ($2,100) Miscellaneous ($800 + $0.109) Total expense Het operating income 44,100 10, 200 2,850 3,500 2,100 2,900 65,650 $14, 150

Answer 1

Flight Cafe

Activity Variances

For the month ended July 31 Particulars Planned Budget Flexible (Actual) Budget Company's Activity Variance=(Planned - Flexible) Favorable(F)/ Unfavorable(U)/ None Revenue 76000 79800 3800 F Expenses: Raw Materials 42000 44100 2100 U Wages and Salaries 10000 10200 200 U Utilities 2800 2850 50 U Facility Rent 3500 3500 - None Insurance 2100 2100 - None Miscellaneous 2800 2900 100 U Total Expense 63200 65650 2450 U Net Operating Income 12800 14150 1350 F

Effect of variance is favorable when actual revenue is more than the planned/budgeted revenue and when actual expense is less than the planned/budgeted expense.

While the effect of variance is unfavorable when actual revenue is less than the planned/budgeted revenue and when actual expense is more than the planned/budgeted expense.

There is no effect of variance when actual revenue/expense= budgeted revenue/expense.