Flight Café is a company that prepares in-flight meals for airlines in its kitch
ID: 2575474 • Letter: F
Question
Flight Café is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company's planning budget for July appears below Flight Café Planning Budget For the Month Ended July 31 Budgeted meals (q) Revenue ($4.50q) Expenses 27,000 $121,500 Raw materials ($2.10q) Wages and salaries ($6,200 S0.20q) Utilities ($2,100SO.05q) Facility rent ($3,400) Insurance ($2,500) Miscellaneous ($800 S0.10q) 56,700 11,600 3,450 3,400 2,500 3,500 81,150 40,350 Total expense Net operating income In July, 28,000 meals were actually 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) Revenue ($4.50g) Expenses 28,000 $126,000 Raw materials ($2.10q) Wages and salaries ($6,200 $0.20q) Utilities ($2,100$0.05q) Facility rent ($3,400) Insurance ($2,500) Miscellaneous ($800 S0.10q) 58,800 11,800 3,500 3.400 2,500 3,600 83,600 Total expense Net operating income S 42,400 Required 1. Compute 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 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
Activity Variance = It is the variance which arises in item of cost due to difference in planning budget and flexible budget for a particulars period. It basically arises on changes in level of activity.
Flight cafe
Activity Variances
For the month ended july 31
Working Notes
Particulars Activity Variance Effect of Variance Revenue $4500 F Expenses : Raw Materials $2100 U Wages and salaries $200 U Utilities $50 U Facility Rent $0 No effect Insurance $0 No effect Miscellaneous $100 U Total Expenses $2450 U Net Operating Income $2050 FRelated Questions
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