Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,200 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) 7,200 Revenue ($4.15q) $ 29,880 Expenses: Packing supplies ($0.35q) 2,520 Oyster bed maintenance ($3,000) 3,000 Wages and salaries ($2,500 + $0.35q) 5,020 Shipping ($0.80q) 5,760 Utilities ($1,220) 1,220 Other ($460 + $0.01q) 532 Total expense 18,052 Net operating income $ 11,828 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,200 Revenue $ 26,800 Expenses: Packing supplies 2,690 Oyster bed maintenance 2,860 Wages and salaries 5,430 Shipping 5,490 Utilities 1,030 Other 1,152 Total expense 18,652 Net operating income $ 8,148 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

QUILCENE OYSTERIA
Revenue and spending variance
For the month ended August 31
Particular	Flexible budget	Actual budget	Variance
Number of pounds	7200	7200
Revenue	29880	26800	3080	Unfavourable
Espenses :
Pacakaging supplies	2520	2690	170	Unfavourable
Oyster bed maintenance	3000	2860	140	Favourable
Wages and salaries	5020	5430	410	Unfavourable
Shippig	5760	5490	270	Favourable
Utilities	1220	1030	190	Favourable
Other	532	1152	620	Unfavourable
Total expenses	18052	18652	600	Unfavourable
Net operating Income	11828	8148	3680	Unfavourable