Question

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)		26,000
Revenue ($4.40q)	$	114,400
Expenses:
Raw materials ($2.00q)		52,000
Wages and salaries ($6,500 + $0.20q)		11,700
Utilities ($2,000 + $0.05q)		3,300
Facility rent ($3,200)		3,200
Insurance ($2,400)		2,400
Miscellaneous ($300 + $0.10q)		2,900
Total expense		75,500
Net operating income	$	38,900

In July, 27,000 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)		27,000
Revenue ($4.40q)	$	118,800
Expenses:
Raw materials ($2.00q)		54,000
Wages and salaries ($6,500+ $0.20q)		11,900
Utilities ($2,000 + $0.05q)		3,350
Facility rent ($3,200)		3,200
Insurance ($2,400)		2,400
Miscellaneous ($300 + $0.10q)		3,000
Total expense		77,850
Net operating income	$	40,950

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.)

Revenue:

Expenses:

Raw Materials:

Wages and Salaries:

Utilities:

Facility Rent:

Insurance:

Miscellaneous:

Total Expense:

Net Operating Income:

Answer 1