Question

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 (9) 7,500 $ 31,875 Revenue ($4.259) Expenses Packing supplies ($0.359) Oyster bed maintenance ($3,000) Wages and salaries ($2,600 + $0.409) Shipping ($0.559) Utilities ($1,250) Other ($440 + $0.019) Total expense Net operating income 2,625 3,000 5,600 4,125 1,250 515 17,115 $ 14,760 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,500 $ 27.300 Revenue Expenses Packing supplies Oyster bed maintenance Wage and salaries Shipping Utilities Other Total expense Het operating income 2,795 2,860 6,010 3.855 1,060 1.135 17,715

Answer 1

For the Month Ended August 31	Flexible Budget	Actual Results	Variance
Actual Pounds (q)	$7,500	$7,500	0
Revenue ($4.25 q)	$31,875	$27,300	($4,575) Ù
Expenses
Packing Supplies ($.35 q)	$2,625	$2,795	$170 F
Oyster bed maintenance ($3,000)	$3,000	$2,860	($140) Ù
Wages and Salaries ($2,600 + .40 q)	$5,600	$6,010	$410 F
Shipping ( $ .55 q )	$ 4,125	$3,855	($270) U
Utilities ($1,250)	$1,250	$1,060	($190) U
Other ($440 + $.01 q)	$515	$1,135	$620 F
Total Expenses	$17,115	$17,715	$600 F
Net Operating Income	$14,760	$9,585	($5,175) U

Quilcene Oysteria farm produced the quantity budgeted however sold the Oysters at lower price than budgeted . While some costs offsets the decline other costs packing supplied and wages were higher than budget which increased the negative variance . The overall net income was $ 5175 less than budgets.