Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,200 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)		7,200
Revenue ($4.10q)	$	29,520
Expenses:
Packing supplies ($0.30q)		2,160
Oyster bed maintenance ($3,000)		3,000
Wages and salaries ($2,300 + $0.30q)		4,460
Shipping ($0.80q)		5,760
Utilities ($1,240)		1,240
Other ($460 + $0.01q)		532
Total expense		17,152
Net operating income	$	12,368

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds		7,200
Revenue	$	27,200
Expenses:
Packing supplies		2,330
Oyster bed maintenance		2,860
Wages and salaries		4,870
Shipping		5,490
Utilities		1,050
Other		1,152
Total expense		17,752
Net operating income	$	9,448

Required:

Calculate the company’s revenue and spending variances for August.

Answer 1

Quilence Oysteria
Revenue and Spending Variances
For the month ended August 31
	$
Revenue	2,320.00	U
Expenses:
Packing Supplies	170.00	F
Oyster bed maintenance	140.00	U
Wages and Salaries	410.00	F
Shipping	270.00	U
Utilities	190.00	U
Others	620.00	F
Total Expense	600.00	F
Net Operating Income	2,920.00	U
Explanations
Quilence Oysteria
Revenue and Spending Variances
For the month ended August 31
	Actual Results	Flexible Budgets	Revenue and
	($)	($)	Spending Variances
Pounds	7,200.00	7,200.00	-
Revenue	27,200.00	29,520.00	2,320.00	U
Expenses:
Packing Supplies	2,330.00	2,160.00	170.00	F
Oyster bed maintenance	2,860.00	3,000.00	140.00	U
Wages and Salaries	4,870.00	4,460.00	410.00	F
Shipping	5,490.00	5,760.00	270.00	U
Utilities	1,050.00	1,240.00	190.00	U
Others	1,152.00	532.00	620.00	F
Total Expense	17,752.00	17,152.00	600.00	F
Net Operating Income	9,448.00	12,368.00	2,920.00	U
(Revenue - Expenses)