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) 21,000 Revenue (\$4.30q) \$ 90,300 Expenses: Raw materials (\$2.10q) 44,100 Wages and salaries (\$6,100 + \$0.20q) 10,300 Utilities (\$2,100 + \$0.05q) 3,150 Facility rent (\$3,800) 3,800 Insurance (\$2,600) 2,600 Miscellaneous (\$300 + \$0.10q) 2,400 Total expense 66,350 Net operating income \$ 23,950

In July, 22,000 actually meals were 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) 22,000 Revenue (\$4.30q) \$ 94,600 Expenses: Raw materials (\$2.10q) 46,200 Wages and salaries (\$6,100+ \$0.20q) 10,500 Utilities (\$2,100 + \$0.05q) 3,200 Facility rent (\$3,800) 3,800 Insurance (\$2,600) 2,600 Miscellaneous (\$300 + \$0.10q) 2,500 Total expense 68,800 Net operating income \$ 25,800

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.)

 Flight Cafe Activity varainces For the month Ended July 31 Flexible Budget Planning Budget Activity varainces Budgeted Meals 22000 21000 Revenue 94600 90300 4300 F Expenses: Raw materials 46200 44100 2100 U Wages and salaries 10500 10300 200 U Utilities 3200 3150 50 U Facility rent 3800 3800 0 None Insurance 2600 2600 0 None Miscellaneous 2500 2400 100 U Total Expense 68800 66350 2450 U Net operating income 25800 23950 1850 F

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