Flight Café prepares in-flight meals for airlines in its kitchen located next to
ID: 2514375 • 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 ($4.00q) $ 120,000 Expenses: Raw materials ($2.00q) 60,000 Wages and salaries ($6,400 + $0.20q) 12,400 Utilities ($1,800 + $0.05q) 3,300 Facility rent ($3,400) 3,400 Insurance ($2,600) 2,600 Miscellaneous ($300 + $0.10q) 3,300 Total expense 85,000 Net operating income $ 35,000 Flight Café Activity Variances For the Month Ended July 31 Revenue Expenses Raw materials Wages and salaries Utilities Facility rent Insurance Miscellaneous Total expense Net operating incomeExplanation / Answer
Flexible budget Planning Budget Activity variances Revenue ($4.00q) 124000 120000 4000 F Expenses: Raw materials ($2.00q) 62000 60000 2000 U Wages and salaries ($6,400+ $0.20q) 12600 12400 200 U Utilities ($1,800 + $0.05q) 3350 3300 50 U Facility rent ($3,400) 3400 3400 0 None Insurance ($2,600) 2600 2600 0 None Miscellaneous ($300 + $0.10q) 3400 3300 100 U Total expense 87350 85000 2350 U Net operating income 36650 35000 1650 F
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