Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,100 pounds of oysters in August. The company's flexible budget for August appears below: Flexible Budget For the Month Ended August 31 Actual pounds (a) Revenue ($4.20q) $29,820 Packing supplies (S0.35q) Oyster bed maintenance ($3,300) Wages and salaries ($2,300 $0.50q) Shipping ($0.65q) Utilities (S1,240) Other ($480+ $0.01q) 2.485 3,300 5,850 4,615 551 Total expense Net operating income $11,779 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds Revenue 7.100 $26,800 Packing supplies Oyster bed maintenance Wages and salaries Shipping Utilities 2.655 3.160 6,260 4,345 1,050 Total expense 18,641 8,159 Net operating income

Answer 1

Quilcene Oysteria
Revenue and Spending Variances
For the Month Ended August 31
Revenue	3020	U
Expenses:
Packing supplies	170	U
Oyster bed maintenance	140	F
Wages and salaries	410	U
Shipping	270	F
Utilities	190	F
Other	620	U
Total expense	600	U
Net operating income	3620	U

The revenue and spending variance is the difference between the actual results and the flexible budget.

When the actual revenue is higher than the flexible budget, the revenue variance is favorable and when the actual revenue is lower than the flexible budget, the revenue variance is unfavorable. When the actual costs are higher than the flexible budget, the spending variance is unfavorable and when the actual costs are lower than the flexible budget, the spending variance is favorable.