Flight Café is a company that prepares in-flight meals for airlines in its kitch

Question

Flight Café is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company's planning budget for July appears below Flight Café Planning Budget For the Month Ended July 31 Budgeted meals (q) Revenue ($3.90q) Expenses 24,000 $93,600 Raw materials ($2.10q) Wages and salaries ($6,300S0.20q) Utilities ($1,800$0.05q) Facility rent ($3,300) Insurance ($2,800) Miscellaneous ($800 S0.10q) 50,400 11,100 3,000 3,300 2,800 3,200 Total expense Net operating income $ 19,800 In July, 25,000 meals were actually served. The company's flexible budget for this level of activity appears below Flight Café Flexible Budget For the Month Ended July 31 Budgeted meals (q) Revenue ($3.90q) Expenses 25,000 $ 97,500 Raw materials ($2.10q) Wages and salaries ($6,300$0.20q) Utilities ($1,800$0.05q) Facility rent ($3,300) Insurance ($2,800) Miscellaneous ($800S0.10q) 52.500 11,300 3,050 3,300 2,800 3,300 Total expense Net operating income S 21,250

Explanation / Answer

Flight Cafe Activity Variance For the month ended July 31 Workings: Revenue $ 3,900 F $3.90 X 1,000 Expenses: Raw Material $ 2,100 U $2.10 X 1,000 Wages and Salaries $     200 U $0.20 X 1,000 Utilities $       50 U $0.05 X 1,000 Facility Rent 0 None Insurance 0 None Miscellaneous $     100 U $0.10 X 1,000 Total expense $ 2,450 U Net Operating Income $ 1,450 F Actual Meals Served             25,000 Less: Budgeted meals             24,000 Difference                1,000

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