1

Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The companys planning budget for May appears below:

Puget Sound Divers Planning Budget For the Month Ended May 31
Budgeted diving-hours (q)		300
Revenue ($390.00q)	$	117,000
Expenses:
Wages and salaries ($11,700 + $126.00q)		49,500
Supplies ($5.00q)		1,500
Equipment rental ($2,200 + $23.00q)		9,100
Insurance ($4,100)		4,100
Miscellaneous ($550 + $1.50q)		1,000
Total expense		65,200
Net operating income	$	51,800

During May, the companys actual activity was 290 diving-hours.

Required:

Prepare a flexible budget for May. (Round your answers to the nearest whole number.)

2

Flight Caf prepares in-flight meals for airlines in its kitchen located next to a local airport. The companys planning budget for July appears below:

Flight Caf
Planning Budget
For the Month Ended July 31
Budgeted meals (q)		22,000
Revenue ($3.90q)	$	85,800
Expenses:
Raw materials ($2.00q)		44,000
Wages and salaries ($6,200 + $0.20q)		10,600
Utilities ($1,900 + $0.05q)		3,000
Facility rent ($3,300)		3,300
Insurance ($2,600)		2,600
Miscellaneous ($700 + $0.10q)		2,900
Total expense		66,400
Net operating income	$	19,400

In July, 23,000 meals were actually served. The companys flexible budget for this level of activity appears below:

Flight Caf
Flexible Budget
For the Month Ended July 31
Budgeted meals (q)		23,000
Revenue ($3.90q)	$	89,700
Expenses:
Raw materials ($2.00q)		46,000
Wages and salaries ($6,200+ $0.20q)		10,800
Utilities ($1,900 + $0.05q)		3,050
Facility rent ($3,300)		3,300
Insurance ($2,600)		2,600
Miscellaneous ($700 + $0.10q)		3,000
Total expense		68,750
Net operating income	$	20,950

Required:

1. Calculate the companys 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.)

3

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,900 pounds of oysters in August. The companys flexible budget for August appears below:

Quilcene Oysteria
Flexible Budget
For the Month Ended August 31
Actual pounds (q)		7,900
Revenue ($4.25q)	$	33,575
Expenses:
Packing supplies ($0.40q)		3,160
Oyster bed maintenance ($3,200)		3,200
Wages and salaries ($2,100 + $0.50q)		6,050
Shipping ($0.70q)		5,530
Utilities ($1,240)		1,240
Other ($420 + $0.01q)		499
Total expense		19,679
Net operating income	$	13,896

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds		7,900
Revenue	$	26,800
Expenses:
Packing supplies		3,330
Oyster bed maintenance		3,060
Wages and salaries		6,460
Shipping		5,260
Utilities		1,050
Other		1,119
Total expense		20,279
Net operating income	$	6,521

Required:

Calculate the companys 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.)

4

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the companys costs:

	Fixed Cost per Month			Cost per Car Washed
Cleaning supplies				$	0.60
Electricity	$	1,000		$	0.10
Maintenance				$	0.25
Wages and salaries	$	4,600		$	0.20
Depreciation	$	8,100
Rent	$	2,200
Administrative expenses	$	1,800		$	0.02

For example, electricity costs are $1,000 per month plus $0.10 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.50 per car washed.

Required:

Prepare the companys planning budget for August.

5

Via Gelato is a popular neighborhood gelato shop. The company has provided the following cost formulas and actual results for the month of June:

	Fixed Element per Month			Variable Element per Liter			Actual Total for June
Revenue				$	21.00		$	133,540
Raw materials				$	5.55		$	37,130
Wages	$	6,500		$	2.30		$	21,300
Utilities	$	2,530		$	1.10		$	10,000
Rent	$	3,500					$	3,500
Insurance	$	2,250					$	2,250
Miscellaneous	$	740		$	1.25		$	8,790

While gelato is sold by the cone or cup, the shop measures its activity in terms of the total number of liters of gelato sold. For example, wages should be $6,500 plus $2.30 per liter of gelato sold and the actual wages for June were $21,300. Via Gelato expected to sell 6,400 liters in June, but actually sold 6,600 liters.

Required:

Calculate Via Gelato revenue and spending variances for June. (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.)