Question

# Flight Café prepares in-flight meals for airlines in its kitchen located next to a local airport....

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 (\$3.80q) \$ 110,200 Expenses: Raw materials (\$1.90q) 55,100 Wages and salaries (\$6,500 + \$0.20q) 12,300 Utilities (\$2,100 + \$0.05q) 3,550 Facility rent (\$3,000) 3,000 Insurance (\$2,400) 2,400 Miscellaneous (\$500 + \$0.10q) 3,400 Total expense 79,750 Net operating income \$ 30,450

In July, 30,000 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) 30,000 Revenue (\$3.80q) \$ 114,000 Expenses: Raw materials (\$1.90q) 57,000 Wages and salaries (\$6,500+ \$0.20q) 12,500 Utilities (\$2,100 + \$0.05q) 3,600 Facility rent (\$3,000) 3,000 Insurance (\$2,400) 2,400 Miscellaneous (\$500 + \$0.10q) 3,500 Total expense 82,000 Net operating income \$ 32,000

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.)

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