Question

# Flight Café is a company that prepares in-flight meals for airlines in its kitchen located next...

 Flight Café is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company’s planning budget for July appears below:

 Flight Café Planning Budget For the Month Ended July 31 Budgeted meals (q) 29,000 Revenue (\$4.40q) \$ 127,600 Expenses: Raw materials (\$2.20q) 63,800 Wages and salaries (\$6,200 + \$0.20q) 12,000 Utilities (\$2,100 + \$0.05q) 3,550 Facility rent (\$3,100) 3,100 Insurance (\$2,400) 2,400 Miscellaneous (\$700 + \$0.10q) 3,600 Total expense 88,450 Net operating income \$ 39,150

 In July, 30,000 meals were actually 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) 30,000 Revenue (\$4.40q) \$ 132,000 Expenses: Raw materials (\$2.20q) 66,000 Wages and salaries (\$6,200 + \$0.20q) 12,200 Utilities (\$2,100 + \$0.05q) 3,600 Facility rent (\$3,100) 3,100 Insurance (\$2,400) 2,400 Miscellaneous (\$700 + \$0.10q) 3,700 Total expense 91,000 Net operating income \$ 41,000

 Required: 1. Compute 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 Café Activity Variances For the Month Ended July 31 Revenue Expenses: Raw materials Wages and salaries Utilities Facility rent Insurance Miscellaneous Total expense Net operating income

Solution 1:

 Flight café Activity Variances For the month ended July 31 Particulars Flexible Budget (30000 meals) Planning Budget (29000 meals) Variances Fav. / Unfav. Revenue \$132,000.00 \$127,600.00 \$4,400.00 F Expenses: Raw Materials \$66,000.00 \$63,800.00 \$2,200.00 U Wages and salaries \$12,200.00 \$12,000.00 \$200.00 U Utilities \$3,600.00 \$3,550.00 \$50.00 U Facility rent \$3,100.00 \$3,100.00 \$0.00 None Insurance \$2,400.00 \$2,400.00 \$0.00 None Miscellaneous \$3,700.00 \$3,600.00 \$100.00 U Total Expenses \$91,000.00 \$88,450.00 \$2,550.00 U Net Operating Income \$41,000.00 \$39,150.00 \$1,850.00 F

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