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 company's planning budget for July appears below: 18,000 $81,000 Flight Caf Planning Budget For the Month Ended July 31 Budgeted meals (9) Revenue ($4.50q) Expenses: Raw materials ($2.409) Wages and salaries ($5,200 + $0.309) Utilities ($2,400 + $0.059) Facility rent ($4,300) Insurance ($2,300) Miscellaneous ($680 + $0.109) Total expense Net operating income 43,200 10,600 3,300 4,300 2,300 2,480 66,180 $14,820 In July, 17,800 meals were actually served. The company's flexible budget for this level of activity appears below: 17,800 $80,100 Flight Caf Flexible Budget For the Month Ended July 31 Budgeted meals (9) Revenue ($4.50q) Expenses: Raw materials ($2.409) Wages and salaries ($5,200 + $0.30q) Utilities ($2,400 + $0.059) Facility rent ($4,300) Insurance ($2,300) Miscellaneous ($680 + $0.109) Total expense Net operating income 42,720 10,540 3,290 4,300 2,300 2,460 65,610 $14,490 Required: 1. Calculate the company's activity variances for July. (Hint: Refer to Exhibit 9-6.) 2. Which of the activity variances should be of concern to management? Explain