Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company

Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,200 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) 7,200 Revenue ($4.05q) $ 29,160 Expenses: Packing supplies ($0.35q) 2,520 Oyster bed maintenance ($3,500) 3,500 Wages and salaries ($2,000 + $0.25q) 3,800 Shipping ($0.65q) 4,680 Utilities ($1,260) 1,260 Other ($460 + $0.01q) 532 Total expense 16,292 Net operating income $ 12,868 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,200 Revenue $ 26,800 Expenses: Packing supplies 2,690 Oyster bed maintenance 3,360 Wages and salaries 4,210 Shipping 4,410 Utilities 1,070 Other 1,152 Total expense 16,892 Net operating income $ 9,908 Required: Calculate the company’s revenue and spending variances for August.

Explanation / Answer

Quilcene Oysteria flexible budget For the Month Ended August 31 Actual pounds (q) 7,200 Revenue ($4.05q) $ 29,160 Expenses: Packing supplies ($0.35q) 2,520 Oyster bed maintenance ($3,500) 3,500 Wages and salaries ($2,000 + $0.25q) 3,800 Shipping ($0.65q) 4,680 Utilities ($1,260) 1,260 Other ($460 + $0.01q) 532 Total expense $16,292 Net operating income $12,868 Quilcene Oysteria Income statement For the Month Ended August 31 Actual pounds (q) 7,200 Revenue $ 26,800 Expenses: Packing supplies 2,690 Oyster bed maintenance 3,360 Wages and salaries 4,210 Shipping 4,410 Utilities 1,070 Other 1,152 Total expense $16,892 Net operating income $ 9,908 Quilcene Oysteria Revenue and spending variances For the Month Ended August 31 ACTUAL RESULTS FLEXIBLE BUDGET REVENUE AND SPENDING VARIANCES Pounds (q) 7,200 7,200 Revenue ($4.05q) $ 26,800 $ 29,160 $2,360(U) Expenses: Packing supplies ($0.35q) 2,690 2,520 $170(U) Oyster bed maintenance($3,500) 3,360 3,500 $140(F) Wages and salaries ($2,000 + $0.25q) 4,210 3,800 $410(U) Shipping ($0.65q) 4,410 4,680 $270(F) Utilities ($1,260) 1,070 1,260 $190(F) Other ($460 + $0.01q) 1,152 532 $620(U) Total expense $16,892 $16,292 $600(U) Net operating income $ 9,908 $ 12,868 $2,960(U)

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