Question

Exercise 9-2 Prepare a Report Showing Revenue and Spending Variances [LO9-2]

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,800 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)		7,800
Revenue ($4.05q)	$	31,590
Expenses:
Packing supplies ($0.30q)		2,340
Oyster bed maintenance ($3,300)		3,300
Wages and salaries ($2,200 + $0.35q)		4,930
Shipping ($0.75q)		5,850
Utilities ($1,300)		1,300
Other ($450 + $0.01q)		528
Total expense		18,248
Net operating income	$	13,342

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds		7,800
Revenue	$	27,500
Expenses:
Packing supplies		2,510
Oyster bed maintenance		3,160
Wages and salaries		5,340
Shipping		5,580
Utilities		1,110
Other		1,148
Total expense		18,848
Net operating income	$	8,652

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.)

Quilcene Oysteria
Revenue and Spending Variances
For the Month Ended August 31
Revenue
Expenses:
Packing supplies
Oyster bed maintenance
Wages and salaries
Shipping
Utilities
Other
Total expense
Net operating income

Answer 1

Quilcene Oysteria
Revenue and Spending Variances
For the Month Ended August 31
Revenue	4090	U
Expenses:
Packing supplies	170	U
Oyster bed maintenance	140	F
Wages and salaries	410	U
Shipping	270	F
Utilities	190	F
Other	620	U
Total expense	600	U
Net operating income	4690	U
Workings:
	Actual results	Flexible Budget	Revenue and Spending Variances
Revenue	27500	31590	4090	U
Expenses:
Packing supplies	2510	2340	170	U
Oyster bed maintenance	3160	3300	140	F
Wages and salaries	5340	4930	410	U
Shipping	5580	5850	270	F
Utilities	1110	1300	190	F
Other	1148	528	620	U
Total expense	18848	18248	600	U
Net operating income	8652	13342	4690	U