Question

Exercise 9-3 Revenue and Spending Variances [LO9-3] Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,500 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) 7,500 Revenue ($4.10q) $ 30,750 Expenses: Packing supplies ($0.35q) 2,625 Oyster bed maintenance ($3,200) 3,200 Wages and salaries ($2,600 + $0.45q) 5,975 Shipping ($0.65q) 4,875 Utilities ($1,210) 1,210 Other ($470 + $0.01q) 545 Total expense 18,430 Net operating income $ 12,320

The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,500 Revenue $ 26,500 Expenses: Packing supplies 2,795 Oyster bed maintenance 3,060 Wages and salaries 6,385 Shipping 4,605 Utilities 1,020 Other 1,165 Total expense 19,030 Net operating income $ 7,470 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

Revenue (30750-26500)	4250 U
Expense
Packing supplies (2625-2795)	170 U
Oyster bed maintenance (3200-3060)	140 F
Wages and salaries (5975-6385)	410 U
Shipping (4875-4605)	270 F
Utilities (1210-1020)	190 F
Other (545-1165)	620 U
Total expense	600 U
Net operating income	4850 U