The Flight Highlands Caf is a company that prepares meals for tourists and citizens in its kitchen located next to the local airport. The company's planning and actual budgets for March appears below:

The Flight Highlands Caf

Planning and actual budgets for the month ended March 31, 2019

PLANNINGACTUAL

Budgeted meals quantity (q)20 00018 000

Revenues (5.00q)100 00090 000

Expenses:

Raw material (2.50q)50 00045 000

Wages and salaries (5 500+0.25q)10 50010 000

Utilities (2 500 + 0.05q)3 5003 400

Facility rent 5 0005 500

Insurance2 8003 200

Fuel2 5002 800

Net Operating Income25 70020 100

Required:

1.What is the objective of preparing a budget for Flight Highlands Caf?

2.Prepare report showing the company's revenue and spending variance for March?

3.Which variances should be of concern to management? Explain

4.Advise the Flight Highlands Caf on what they need to do to maintain their profitability and sustainability going forward.