Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,400 pounds of oysters in August. The company’s flexible budget for August appears below: Quilcene Oysteria Flexible Budget For the Month Ended August 31 Actual pounds (q) 7,400 Revenue ($4.25q) $ 31,450 Expenses: Packing supplies ($0.35q) 2,590 Oyster bed maintenance ($3,300) 3,300 Wages and salaries ($2,100 + $0.40q) 5,060 Shipping ($0.60q) 4,440 Utilities ($1,210) 1,210 Other ($460 + $0.01q) 534 Total expense 17,134 Net operating income $ 14,316 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,400 Revenue $ 26,700 Expenses: Packing supplies 2,760 Oyster bed maintenance 3,160 Wages and salaries 5,470 Shipping 4,170 Utilities 1,020 Other 1,154 Total expense 17,734 Net operating income $ 8,966 Required: Calculate the company’s revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Answer 1

Required: Calculate the company's revenue and spending variances for August. Quilcene Oysteria Revenue and Spending Variances For the Month Ended August 31 $4,750 Revenue Expenses: Packing supplies Oyster bed maintenance Wages and salaries Shipping 170 140 410 270 Utilities 190 620 Other Total expense Net operating income 600 $5,350 Explanation:

Quilcene Oysteria Revenue and Spending Variances For the Month Ended August 31 Actual Flexible Revenue and Results Budget Spending Variances Pounds (q) 7,400 7,400 Revenue ($4.25q) Expenses: Packing supplies ($0.35q) Oyster bed maintenance ($3,300) Wages and salaries ($2,100 + $0.40q) Shipping ($0.60q) Utilities ($1,210) Other ($460 + $0.01q) Total expense Net operating income $26,700 $31,450 $4,750 U 2,590 3,300 5,060 170 U 2,760 3,160 140 F 410 U 5,470 4,170 270 F 190 F 620 U 600 U $5,350 U 4,440 1,210 534 17,134 $8,966 $14,316 1,020 1,154 17,734

Revenue Variance (Actual Revenue - Flexible Budget Revenue) ($26,700 – $31,450) = $4,750 U Spending Variance (Actual Cost – Flexible Budget Cost) Packing supplies ($2,760 – $2,590) = $170 U Oyster bed maintenance ($3,160 – $3,300) = $140 F Wages and salaries ($5,470 – $5060) = $410 U Shipping ($4,170 – $4,440) = $270 F Utilities ($1,020 – $1,210) = $190 F Other ($1,154 - $534) = $620 U %3D %3D %3D