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Flight Caf is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The companys planning budget for
Flight Caf is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The companys planning budget for July appears below:
Flight Caf Planning Budget For the Month Ended July 31 | ||
Budgeted meals (q) | 28,000 | |
Revenue ($4.30q) | $ | 120,400 |
Expenses: | ||
Raw materials ($1.80q) | 50,400 | |
Wages and salaries ($6,000 + $0.20q) | 11,600 | |
Utilities ($2,200 + $0.05q) | 3,600 | |
Facility rent ($3,700) | 3,700 | |
Insurance ($2,300) | 2,300 | |
Miscellaneous ($500 + $0.10q) | 3,300 | |
Total expense | 74,900 | |
Net operating income | $ | 45,500 |
In July, 29,000 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) | 29,000 | |
Revenue ($4.30q) | $ | 124,700 |
Expenses: | ||
Raw materials ($1.80q) | 52,200 | |
Wages and salaries ($6,000 + $0.20q) | 11,800 | |
Utilities ($2,200 + $0.05q) | 3,650 | |
Facility rent ($3,700) | 3,700 | |
Insurance ($2,300) | 2,300 | |
Miscellaneous ($500 + $0.10q) | 3,400 | |
Total expense | 77,050 | |
Net operating income | $ | 47,650 |
Required:
1. Compute the companys activity variances for July.
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