Question

Exercise 9-3 Revenue and Spending Variances [LO9-3]

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,100 pounds of oysters in August. The company’s flexible budget for August appears below:

Quilcene Oysteria
Flexible Budget
For the Month Ended August 31
Actual pounds (q)		7,100
Revenue ($4.15q)	$	29,465
Expenses:
Packing supplies ($0.30q)		2,130
Oyster bed maintenance ($3,600)		3,600
Wages and salaries ($2,200 + $0.30q)		4,330
Shipping ($0.75q)		5,325
Utilities ($1,210)		1,210
Other ($480 + $0.01q)		551
Total expense		17,146
Net operating income	$	12,319

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds		7,100
Revenue	$	27,100
Expenses:
Packing supplies		2,300
Oyster bed maintenance		3,460
Wages and salaries		4,740
Shipping		5,055
Utilities		1,020
Other		1,171
Total expense		17,746
Net operating income	$	9,354

Required:

Calculate the company’s revenue and spending variances for August. (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.)

Answer 1

Answer-

QUILCENE OYSTERIA FARMS
Revenue & Spending Variance
For the month ended August 31
Particulars	Flexible Budget	Actual Results	Variances	Remark
	$		$
Revenue	29465	27100	-2365	Unfavorable
Less:-Expenses
Packing Supplies	2130	2300	-170	Unfavorable
Oyster bed maintenance	3600	3460	140	Favorable
Wages & salaries	4330	4740	-410	Unfavorable
Shipping	5325	5055	270	Favorable
Utilities	1210	1020	190	Favorable
Other	551	1171	-620	Unfavorable
Total Expenses	17146	17746	-600	Unfavorable
Net Operating Income	12319	9354	-2965	Unfavorable