Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 8,000 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)		8,000
Revenue ($4.25q)	$	34,000
Expenses:
Packing supplies ($0.35q)		2,800
Oyster bed maintenance ($3,500)		3,500
Wages and salaries ($2,400 + $0.50q)		6,400
Shipping ($0.70q)		5,600
Utilities ($1,240)		1,240
Other ($490 + $0.01q)		570
Total expense		20,110
Net operating income	$	13,890

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds		8,000
Revenue	$	26,600
Expenses:
Packing supplies		2,970
Oyster bed maintenance		3,360
Wages and salaries		6,810
Shipping		5,330
Utilities		1,050
Other		1,190
Total expense		20,710
Net operating income	$	5,890

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

Revenue and spending variance

Quilcene Oysteria
Revenue and spending variance
For the Month Ended August 31
Revenue	$	7400 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	$	8000 U