Flight Café prepares in-flight meals for airlines in its kitchen located next to
ID: 2569216 • 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:
Flight Café Planning Budget For the Month Ended July 31 Budgeted meals (q) 28,000 Revenue ($4.40q) $ 123,200 Expenses: Raw materials ($2.00q) 56,000 Wages and salaries ($6,100 + $0.20q) 11,700 Utilities ($1,800 + $0.05q) 3,200 Facility rent ($3,400) 3,400 Insurance ($2,300) 2,300 Miscellaneous ($600 + $0.10q) 3,400 Total expense 80,000 Net operating income $ 43,200 In July, 29,000 actually meals were served. The company’s flexible budget for this level of activity appears below: Flight Café Flexible Budget For the Month Ended July 31 Budgeted meals (q) 29,000 Revenue ($4.40q) $ 127,600 Expenses: Raw materials ($2.00q) 58,000 Wages and salaries ($6,100+ $0.20q) 11,900 Utilities ($1,800 + $0.05q) 3,250 Facility rent ($3,400) 3,400 Insurance ($2,300) 2,300 Miscellaneous ($600 + $0.10q) 3,500 Total expense 82,350 Net operating income $ 45,250 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.)
Explanation / Answer
Activity variances Revenue 4400 F Expenses: Raw materials 2000 U Wages and salaries 200 U Utilities 50 U Facility rent 0 None Insurance 0 None Miscellaneous 100 U Total expense 2350 U Net operating income 2050 F
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