Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,300 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)		7,300
Revenue ($4.25q)	$	31,025
Expenses:
Packing supplies ($0.30q)		2,190
Oyster bed maintenance ($3,500)		3,500
Wages and salaries ($2,500 + $0.45q)		5,785
Shipping ($0.75q)		5,475
Utilities ($1,240)		1,240
Other ($440 + $0.01q)		513
Total expense		18,703
Net operating income	$	12,322

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds		7,300
Revenue	$	26,500
Expenses:
Packing supplies		2,360
Oyster bed maintenance		3,360
Wages and salaries		6,195
Shipping		5,205
Utilities		1,050
Other		1,133
Total expense		19,303
Net operating income	$	7,197

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.)

Answer 1

Quilcene OysteriaRevenue and Spending Variances For the Month Ended August 31
Revenue	4,525
Expenses:
Packing supplies	170
Oyster bed maintenance	140
Wages and salaries	410
Shipping	270
Utilities	190
Other	620
Total expense	600
Net operating income	5125

Pounds	ActualResults	FlexibleBudget	Revenue and Spending Variances
Revenue ($4.25q)	26,500	31,025	4,525	U
Expenses:
Packing supplies	2360	2190	170	U
Oyster bed maintenance	3360	3500	140	F
Wages and salaries	6195	5785	410	U
Shipping	5205	5475	270	F
Utilities	1050	1240	190	F
Other	1133	513	620	U
Total expense	19303	18703	600	U
Net operating income	7,197	12,322	5,125	U