Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company
ID: 2412814 • Letter: Q
Question
Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,400 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) 7,400 Revenue ($4.15q) $ 30,710 Expenses: Packing supplies ($0.30q) 2,220 Oyster bed maintenance ($3,600) 3,600 Wages and salaries ($2,200 + $0.30q) 4,420 Shipping ($0.55q) 4,070 Utilities ($1,200) 1,200 Other ($410 + $0.01q) 484 Total expense 15,994 Net operating income $ 14,716 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,400 Revenue $ 27,100 Expenses: Packing supplies 2,390 Oyster bed maintenance 3,460 Wages and salaries 4,830 Shipping 3,800 Utilities 1,010 Other 1,104 Total expense 16,594 Net operating income $ 10,506 Required: Compute 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.)
Explanation / Answer
Ans:
Revenue and spending variance is the difference between flexibe budget prepared for actual quantity and actual result for that period. Revenue and spending variance help to analyse variation between actual and expected so that organisation can focus on items which has unfavorable variance and try to reduce them for upcoming period.
Flexible budget performance report of Quilcene Oysteria Farms for august month is as folows:
Quilcene Oysteria Farms
Flexible Budget Performance Report
For August month
Particulars
Flexible Budget
Actual Results
Revenue and Spending variance
Quantity
7400
7400
Revenue
30710
27100
3610
U
Expenses:
Packing Supplies
2220
2390
170
U
Oyster bed Maintenance
3600
3460
140
F
Wages and salaries
4420
4830
410
U
Shipping
4070
3800
270
F
Utilities
1200
1010
190
F
Other Expenses
484
1104
620
U
Total Expenses
15994
16594
600
U
Net Operating Income
14716
10506
4210
U
Quilcene Oysteria Farms
Flexible Budget Performance Report
For August month
Particulars
Flexible Budget
Actual Results
Revenue and Spending variance
Quantity
7400
7400
Revenue
30710
27100
3610
U
Expenses:
Packing Supplies
2220
2390
170
U
Oyster bed Maintenance
3600
3460
140
F
Wages and salaries
4420
4830
410
U
Shipping
4070
3800
270
F
Utilities
1200
1010
190
F
Other Expenses
484
1104
620
U
Total Expenses
15994
16594
600
U
Net Operating Income
14716
10506
4210
U
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