Flight Café prepares in-flight meals for airlines in its kitchen located next to
ID: 2572360 • 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) 29,000 Revenue ($4.00q) $ 116,000 Expenses: Raw materials ($2.30q) 66,700 Wages and salaries ($6,400 + $0.20q) 12,200 Utilities ($2,100 + $0.05q) 3,550 Facility rent ($3,600) 3,600 Insurance ($2,700) 2,700 Miscellaneous ($900 + $0.10q) 3,800 Total expense 92,550 Net operating income $ 23,450 In July, 30,000 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) 30,000 Revenue ($4.00q) $ 120,000 Expenses: Raw materials ($2.30q) 69,000 Wages and salaries ($6,400+ $0.20q) 12,400 Utilities ($2,100 + $0.05q) 3,600 Facility rent ($3,600) 3,600 Insurance ($2,700) 2,700 Miscellaneous ($900 + $0.10q) 3,900 Total expense 95,200 Net operating income $ 24,800 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 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) 29,000 $116,000 Revenue ($4.00q) Expenses: Raw materials ($2.30g) Wages and salaries ($6,400 $0.20g) Utilities ($2,100 + $0.05g) Facility rent ($3,600) Insurance ($2,700) Miscellaneous ($900 $0.10g) 66,700 12,200 3,550 3,600 2,700 3,800 92,550 $ 23,450 Total expense Net operating incomeExplanation / Answer
Planning budget Flexible budget Activity variances Meals 29000 30000 Revenue 116000 120000 4000 F Expenses: Raw materials 66700 69000 2300 U Wages and salaries 12200 12400 200 U Utilities 3550 3600 50 U Facility rent 3600 3600 0 None Insurance 2700 2700 0 None Miscellaneous 3800 3900 100 U Total expense 92550 95200 2650 U Net operating income 23450 24800 1350 F
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