Question
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 31Budgeted meals (q)20,000Revenue ($3.90q)$78,000Expenses:Raw materials ($1.90q)38,000Wages and salaries ($6,500 + $0.20q)10,500Utilities ($2,100 + $0.05q)3,100Facility rent ($3,600)3,600Insurance ($2,700)2,700Miscellaneous ($500 + $0.10q)2,500Total expense60,400Net operating income$17,600
In July, 21,000 meals were actually served. The companys flexible budget for this level of activity appears below:
Flight Caf Flexible Budget For the Month Ended July 31Budgeted meals (q)21,000Revenue ($3.90q)$81,900Expenses:Raw materials ($1.90q)39,900Wages and salaries ($6,500 + $0.20q)10,700Utilities ($2,100 + $0.05q)3,150Facility rent ($3,600)3,600Insurance ($2,700)2,700Miscellaneous ($500 + $0.10q)2,600Total expense62,650Net operating income$19,250
Required:
1. Compute 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., zerovariance). Input all amounts as positive values.)
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