Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,900 pounds of oysters in August. The companys flexible budget for August appears below:

Quilcene Oysteria Flexible Budget For the Month Ended August 31
Actual pounds (q)		7,900
Revenue ($4.10q)	$	32,390
Expenses:
Packing supplies ($0.35q)		2,765
Oyster bed maintenance ($3,200)		3,200
Wages and salaries ($2,500 + $0.40q)		5,660
Shipping ($0.60q)		4,740
Utilities ($1,250)		1,250
Other ($470 + $0.01q)		549
Total expense		18,164
Net operating income	$	14,226

The actual results for August appear below:

Quilcene Oysteria Income Statement For the Month Ended August 31
Actual pounds		7,900
Revenue	$	26,700
Expenses:
Packing supplies		2,935
Oyster bed maintenance		3,060
Wages and salaries		6,070
Shipping		4,470
Utilities		1,060
Other		1,169
Total expense		18,764
Net operating income	$	7,936

Required:

Compute the companys revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Quilcene Oysteria
Revenue and Spending Variances
For the Month Ended August 31
Revenue
Expenses:
Packing supplies
Oyster bed maintenance
Wages and salaries
Shipping
Utilities
Other
Total expense
Net operating income

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)		25,000
Revenue ($4.00q)	$	100,000
Expenses:
Raw materials ($1.90q)		47,500
Wages and salaries ($6,400 + $0.20q)		11,400
Utilities ($2,000 + $0.05q)		3,250
Facility rent ($3,700)		3,700
Insurance ($2,700)		2,700
Miscellaneous ($400 + $0.10q)		2,900
Total expense		71,450
Net operating income	$	28,550

In July, 26,000 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)		26,000
Revenue ($4.00q)	$	104,000
Expenses:
Raw materials ($1.90q)		49,400
Wages and salaries ($6,400 + $0.20q)		11,600
Utilities ($2,000 + $0.05q)		3,300
Facility rent ($3,700)		3,700
Insurance ($2,700)		2,700
Miscellaneous ($400 + $0.10q)		3,000
Total expense		73,700
Net operating income	$	30,300

Required:
2.	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., zero variance). Input all amounts as positive values.)

Flight Caf
Activity Variances
For the Month Ended July 31
Revenue
Expenses:
Raw materials
Wages and salaries
Utilities
Facility rent
Insurance
Miscellaneous
Total expense
Net operating income

3. Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The companys planning budget for May appears below:

Puget Sound Divers Planning Budget For the Month Ended May 31
Budgeted diving-hours (q)		250
Revenue ($430.00q)	$	107,500
Expenses:
Wages and salaries ($11,200 + $126.00q)		42,700
Supplies ($4.00q)		1,000
Equipment rental ($2,200 + $22.00q)		7,700
Insurance ($4,000)		4,000
Miscellaneous ($550 + $1.46q)		915
Total expense		56,315
Net operating income	$	51,185

Required:

During May, the companys activity was actually 240 diving-hours. Complete the following flexible budget for that level of activity.

Puget Sound Divers
Flexible Budget
For the Month Ended May 31
Revenue
Expenses:
Wages and salaries
Supplies
Equipment rental
Insurance
Miscellaneous
Total expense	0
Net operating income	$0

4. Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system.

A typical departmental cost report for a recent period follows:

Assembly Department Cost Report For the Month Ended March 31
	Actual Results		Planning Budget		Variances
Machine-hours		15,000		20,000
Variable costs:
Supplies	$	11,400	$	12,000	$	600	F
Scrap		42,000		45,000		3,000	F
Indirect materials		119,000		142,500		23,500	F
Fixed costs:
Wages and salaries		85,900		80,000		5,900	U
Equipment depreciation		110,000		110,000
Total cost	$	368,300	$	389,500	$	21,200	F

After receiving a copy of this cost report, the supervisor of the Assembly Department stated, These reports are super. It makes me feel really good to see how well things are going in my department. I cant understand why those people upstairs complain so much about the reports.

For the last several years, the companys marketing department has chronically failed to meet the sales goals expressed in the companys monthly budgets.

Complete the new performance report for the quarter, based on Flexible Budget Performance approach. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Westmont Corporation
Assembly Department
Flexible Budget Performance Report
For the Month Ended March 31
	Actual Results	Spending Variances		Flexible Budget	Activity Variances		Planning Budget
Machine-hours (q)	15,000						20,000
Supplies	$11,400						$12,000
Scrap	42,000						45,000
Indirect materials	119,000						142,500
Wages and salaries	85,900						80,000
Equipment depreciation	110,000						110,000
Total	$368,300			$0			$389,500