Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,700...

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,700 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) 7,700
Revenue ($4.15q) $ 31,955
Expenses:
Packing supplies ($0.30q) 2,310
Oyster bed maintenance ($3,500) 3,500
Wages and salaries ($2,300 + $0.50q) 6,150
Shipping ($0.70q) 5,390
Utilities ($1,230) 1,230
Other ($420 + $0.01q) 497
Total expense 19,077
Net operating income $ 12,878

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds 7,700
Revenue $ 26,700
Expenses:
Packing supplies 2,480
Oyster bed maintenance 3,360
Wages and salaries 6,560
Shipping 5,120
Utilities 1,040
Other 1,117
Total expense 19,677
Net operating income $ 7,023

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.)

Homework Answers

Answer #1
Quilcene Oysteria
Revenue and spending variance
For the Month Ended August 31
Actual Revenue and spending variance Flexible budget
Actual pounds 7,700 7700
Revenue 26,700 5255 U 31955
Expenses:
Packing supplies 2,480 170 U 2310
Oyster bed maintenance 3,360 140 F 3500
Wages and salaries 6,560 410 U 6150
Shipping 5,120 270 F 5390
Utilities 1,040 190 F 1230
Other 1,117 620 U 497
Total expense 19,677 600 U 19077
Net operating income 7,023 5855 U 12878
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