Flight Café prepares in-flight meals for airlines in its kitchen located next to
ID: 2509156 • Letter: F
Question
Flight Café prepares in-flight meals for airlines in its kitchen located next to a local airport. The company’s planning budget for July appears below:
In July, 31,000 actually meals were served. The company’s flexible budget for this level of activity appears below:
Required:
1. Calculate the company’s activity variances for July. (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.)
Flight Café Planning Budget For the Month Ended July 31 Budgeted meals (q) 30,000 Revenue ($4.20q) $ 126,000 Expenses: Raw materials ($1.90q) 57,000 Wages and salaries ($6,100 + $0.20q) 12,100 Utilities ($1,900 + $0.05q) 3,400 Facility rent ($3,500) 3,500 Insurance ($2,500) 2,500 Miscellaneous ($700 + $0.10q) 3,700 Total expense 82,200 Net operating income $ 43,800Explanation / Answer
Planning budget Flexible budget Activity variances Meals (q) 30000 31,000 Revenue ($4.20q) 126000 130,200 4,200 F Expenses: Raw materials ($1.90q) 57000 58,900 1,900 U Wages and salaries ($6,100+ $0.20q) 12100 12,300 200 U Utilities ($1,900 + $0.05q) 3400 3,450 50 U Facility rent ($3,500) 3500 3,500 0 None Insurance ($2,500) 2500 2,500 0 None Miscellaneous ($700 + $0.10q) 3700 3,800 100 U Total expense 82,200 84,450 2,250 U Net operating income 43,800 45,750 1,950 F
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