Question

Dixie Queen is a family owned restaurant that specialized in southern style seafood. Data concerning the restaurant's monthly revenue and costs appears as below (q refers to number of meals being served):

	Formula
Revenue	$16.50q
Cost Of Ingredients	$6.25q
wages and salaries	$10,400
utilities	$800 + $0.20q
rent	$2,200
miscellaneous	$600 + $0.80q

The restaurant's planned to serve 1800 meals in April.

The restaurant's actual result of April shows as below for 1700 meals that were served:

Revenue	$27,920
Cost of ingredients	$11,110
wages and salaries	$10,130
utilities	$1,080
rent	$2,200
miscellaneous	$2,240

a) Prepare the Master Budget (Planned Static Budget) for April

b) Prepare the performance report for the month of April. (Master Budget Variances)

c) Prepare Flexible budget for April

d) compute the revenue and spending variances for month of April

Answer 1

a Dixie Queen Master Budget (Planned Static Budget) For the month of April Revenue $29,700 (1,800 x $16.50] Expenses: Cost of ingredients $11,250 (1,800 x $6.25] Wages and salaries $10,400 (Fixed] Utilities $1,160 ($800 + ($0.20 x 1,800)] Rent $2,200 [Fixed] Miscellaneous $2,040 ($600 + ($0.80 x 1,800)] Total Expenses $27,050 Net Income $2,650 [$29700 - $27050]

Dixie Queen Performance Report For the month of April Master Actual Budget $29,700 $27,920 Variance $1,780 Unfavorable Revenue Expenses: Cost of ingredients Wages and salaries Utilities Rent Miscellaneous Total Expenses Net Income $11,250 $10,400 $1,160 $2,200 $2,040 $27,050 $2,650 $11,110 $10,130 $1,080 $2,200 $2,240 $26,760 $1,160 $140 Favorable $270 Favorable $80 Favorable $0 No Variance $200 Unfavorable $290 Favorable $1,490 Unfavorable

Dixie Queen Master Budget (Flexible Budget) For the month of April Revenue $28,050 (1,700 x $16.50] Expenses: Cost of ingredients $10,625 (1,700 x $6.25] Wages and salaries $10,400 (Fixed] Utilities $1,140 ($800 + ($0.20 x 1,700)] Rent $2,200 (Fixed] Miscellaneous $1,960 ($600 + ($0.80 x 1,700)] Total Expenses $26,325 Net Income $1,725 ($28050 - $26325]

d) Dixie Queen Revenue and spending variances Report For the month of April Flexible Actual Variance Budget Revenue $28,050 $27,920 $130 Unfavorable Expenses: Cost of ingredients $10,625 $11,110 $485 Unfavorable Wages and salaries $10,400 $10,130 $270 Favorable Utilities $1,140 $1,080 $60 Favorable Rent $2,200 $2,200 $0 No Variance Miscellaneous $1,960 $2,240 $280 Unfavorable Total Expenses $26,325 $26,760 $435 Unfavorable Net Income $1,725 $1,160 $565 Unfavorable