Exercise 9-2 Activity Variances [LO9-2]

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)		23,000
Revenue ($3.90q)	$	89,700
Expenses:
Raw materials ($1.90q)		43,700
Wages and salaries ($6,500 + $0.20q)		11,100
Utilities ($1,900 + $0.05q)		3,050
Facility rent ($3,100)		3,100
Insurance ($2,600)		2,600
Miscellaneous ($700 + $0.10q)		3,000
Total expense		66,550
Net operating income	$	23,150

In July, 24,000 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)		24,000
Revenue ($3.90q)	$	93,600
Expenses:
Raw materials ($1.90q)		45,600
Wages and salaries ($6,500+ $0.20q)		11,300
Utilities ($1,900 + $0.05q)		3,100
Facility rent ($3,100)		3,100
Insurance ($2,600)		2,600
Miscellaneous ($700 + $0.10q)		3,100
Total expense		68,800
Net operating income	$	24,800

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.)