Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,600 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)		7,600
Revenue ($4.05q)	$	30,780
Expenses:
Packing supplies ($0.30q)		2,280
Oyster bed maintenance ($3,200)		3,200
Wages and salaries ($2,100 + $0.40q)		5,140
Shipping ($0.80q)		6,080
Utilities ($1,290)		1,290
Other ($430 + $0.01q)		506
Total expense		18,496
Net operating income	$	12,284

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds		7,600
Revenue	$	26,800
Expenses:
Packing supplies		2,450
Oyster bed maintenance		3,060
Wages and salaries		5,550
Shipping		5,810
Utilities		1,100
Other		1,126
Total expense		19,096
Net operating income	$	7,704

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.)

	Quilcene Oysteria Revenue and Spending Variances For the Month Ended August 31 Revenue Expenses: Packing supplies Oyster bed maintenance Wages and salaries Shipping Utilities Other Total expense Net operating income

Flight Café prepares in-flight meals for airlines in its kitchen located next to a local airport. The company’s planning budget for July appears below:

Flight Café
Planning Budget
For the Month Ended July 31
Budgeted meals (q)		26,000
Revenue ($4.00q)	$	104,000
Expenses:
Raw materials ($2.10q)		54,600
Wages and salaries ($6,400 + $0.20q)		11,600
Utilities ($1,800 + $0.05q)		3,100
Facility rent ($3,400)		3,400
Insurance ($2,800)		2,800
Miscellaneous ($600 + $0.10q)		3,200
Total expense		78,700
Net operating income	$	25,300

In July, 27,000 meals were actually served. The company’s flexible budget for this level of activity appears below:

Flight Café
Flexible Budget
For the Month Ended July 31
Budgeted meals (q)		27,000
Revenue ($4.00q)	$	108,000
Expenses:
Raw materials ($2.10q)		56,700
Wages and salaries ($6,400+ $0.20q)		11,800
Utilities ($1,800 + $0.05q)		3,150
Facility rent ($3,400)		3,400
Insurance ($2,800)		2,800
Miscellaneous ($600 + $0.10q)		3,300
Total expense		81,150
Net operating income	$	26,850

Required:

1. Calculate the company’s activity variances for July. (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.)

	Flight Café Activity Variances For the Month Ended July 31 Revenue Expenses: Raw materials Wages and salaries Utilities Facility rent Insurance Miscellaneous Total expense Net operating income

Answer 1