Flight Café is a company that prepares in-flight meals for airlines in its kitch
ID: 3198017 • 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:
In July, 27,000 meals were actually served. The company’s flexible budget for this level of activity appears below:
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 CaféPlanning Budget
For the Month Ended July 31 Budgeted meals (q) 26,000 Revenue ($4.50q) $ 117,000 Expenses: Raw materials ($2.00q) 52,000 Wages and salaries ($6,200 + $0.20q) 11,400 Utilities ($1,800 + $0.05q) 3,100 Facility rent ($3,700) 3,700 Insurance ($2,900) 2,900 Miscellaneous ($300 + $0.10q) 2,900 Total expense 76,000 Net operating income $ 41,000
Explanation / Answer
Planned Budget
Flexible
Activity Variance
Favorable (F) / Unfavorable UF
Revenue
$117,000
$121,500
$4500
F
Expenses:
Raw material
$52000
$54000
$2,000
U
Wages and salaries
$11400
$11600
$200
U
Utilities
$3100
$3,150
$50
U
Facility rent
$3,700
$3,700
$0
None
Insurance
$2,900
$2,900
$0
None
Miscellaneous
$2900
$3000
$100
U
Total Expenses
$76000
$78350
$2,350
U
Net Operating Income
$41000
$43150
$2150
F
Planned Budget
Flexible
Activity Variance
Favorable (F) / Unfavorable UF
Revenue
$117,000
$121,500
$4500
F
Expenses:
Raw material
$52000
$54000
$2,000
U
Wages and salaries
$11400
$11600
$200
U
Utilities
$3100
$3,150
$50
U
Facility rent
$3,700
$3,700
$0
None
Insurance
$2,900
$2,900
$0
None
Miscellaneous
$2900
$3000
$100
U
Total Expenses
$76000
$78350
$2,350
U
Net Operating Income
$41000
$43150
$2150
F
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