Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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) 29,000
Revenue ($4.10q) $ 118,900
Expenses:
Raw materials ($2.00q) 58,000
Wages and salaries ($6,100 + $0.20q) 11,900
Utilities ($2,100 + $0.05q) 3,550
Facility rent ($3,800) 3,800
Insurance ($2,800) 2,800
Miscellaneous ($700 + $0.10q) 3,600
Total expense 83,650
Net operating income $ 35,250

In July, 30,000 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) 30,000
Revenue ($4.10q) $ 123,000
Expenses:
Raw materials ($2.00q) 60,000
Wages and salaries ($6,100+ $0.20q) 12,100
Utilities ($2,100 + $0.05q) 3,600
Facility rent ($3,800) 3,800
Insurance ($2,800) 2,800
Miscellaneous ($700 + $0.10q) 3,700
Total expense 86,000
Net operating income $ 37,000

Required:

1. Calculate the companys activity variances for July. (Indicate the effect of each variance by select

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions