Air Meals is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The companys planning budget for December appears below: Air Meals Planning Budget For the Month Ended December 31 Budgeted diving-hours (q) 20,000 Revenue ($3.80q) $76,000 Expenses: Raw materials ($2.30q) 46,000 Wages and salaries ($6,400 + $0.25q) 11,400 Utilities ($2,100 + $0.05q) 3,100 Facility rent ($3,800) 3,800 Insurance ($,2,600) 2,600 Miscellaneous ($700 + $0.10q) 2,700 Total expense $69,600 Net operating income $6,400 In December, 21,000 meals were actually served. The companys flexible budget for this level of activity is as follows: Air Meals Planning Budget For the Month Ended December 31 Budgeted diving-hours (q) 21,000 Revenue ($3.80q) $79,000 Expenses: Raw materials ($2.30q) 48,300 Wages and salaries ($6,400 + $0.25q) 11,650 Utilities ($2,100 + $0.05q) 3,150 Facility rent ($3,800) 3,800 Insurance ($,2,600) 2,600 Miscellaneous ($700 + $0.10q) 2,800 Total expense $72,300 Net operating income $7,500 Required: 1. Prepare a report showing the companys activity variances for December. 2. Which of the activity variances should be of concern to management? Explain