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 Activity Variances Flight Caf Planning Budget For the Month Ended July 31 18,000 $81,000 Expenses: Raw materials ($2.40q) . Wages and salaries ($5,200+$0.30g) 43.200 10,600 3.300 4,300 2,300 2.480 66,180 . . .. Facility rent ($4,300) Insurance ($2,300) Miscelianeous ($680 +$0.10g) .. Total expense . .. Net operating income $14,820 in July, 17.800 meals were actualy served The company's flexible budget for this level of activity appears below search +X Flight Caf Flexible Budget For the Month Ended July 31 17,800 $80,100 Budgeted meals (g) . . . . Expenses: 42,720 Raw materials ($2.40q) +$0.30g)... Utlities ($2,400+$0.05q).... ...2,300 2,460 65,610 .$14,490 4,300 Facility rent (54,300)... Insurance ($2,300). .. Miscelianeous ($680$0.10q) . . Total expense Required 1. Calculate the company's activity variances for July. (Hint Refer to exhibit 9-6.) hich of the activity variances should be of concern to management? Explain. Exhibit 9-6 Flexible Budget Bas on Actual Activit o search F3 F4 F5 F6 F7 F8 2. Which of the activity variances should be of concern to management? Explain. Exhibit 9-6 Flexible Budget Based on Actual Activity Activity Varlances For the Month Ended March 31 Flexible Planning Budget Budget Varlances Activity 1,100 1,000 Revenue ($180.00q) $198000 $180,000 $18,000 F xpenses: Wages and salaries ($65,000 +$37.00q) Hairstyling supplies ($1.50q)... Client gratuities ($4.10q) Electricity ($1.500+$0.10q).. Rent ($28,500) Liability insurance ($2,800). Employee health insurance ($21,300) Miscellaneous ($1.200+ $0.20q) 105,700 102,000 1,500 4,5104,100 1,600 28,500 28,500 2,800 21,300 21,300 1,400 3,700 U 150 U 410 U 10 U 1,650 1,610 2,800 1,420 167.490 0 0 Total expense Net operating income 20 U 163.200 4.290 U 16,800 $13 710 F S 30.510 The revenue variance is labeled favorable (unfavorable) when the revenue in the flexible budget is greater than (iess than) the planning budget. The expense variances are labeled favorable (unfavorabie) when the expense in the flexible budaet is less than (areater than) the planning budget