Flight Café prepares in-flight meals for airlines in its kitchen located next to
ID: 2513204 • 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, 22,000 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) 21,000 Revenue ($3.80q) $ 79,800 Expenses: Raw materials ($2.20q) 46,200 Wages and salaries ($6,200 + $0.20q) 10,400 Utilities ($2,100 + $0.05q) 3,150 Facility rent ($3,200) 3,200 Insurance ($2,200) 2,200 Miscellaneous ($600 + $0.10q) 2,700 Total expense 67,850 Net operating income $ 11,950Explanation / Answer
Flexible budget Activity variances Planning budget Budgeted meals (q) 22000 21000 Revenue ($3.80q) 83600 3800 F 79800 Expenses: Raw materials ($2.20q) 48400 2200 U 46200 Wages and salaries ($6,200+ $0.20q) 10600 200 U 10400 Utilities ($2,100 + $0.05q) 3200 50 U 3150 Facility rent ($3,200) 3200 0 None 3200 Insurance ($2,200) 2200 0 None 2200 Miscellaneous ($600 + $0.10q) 2800 100 U 2700 Total expense 70400 2550 U 67850 Net operating income 13200 1250 F 11950
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