Air Meals is a company that prepares in-flight meals for airlines in its kitchen

Question

Air Meals 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 December appears below:

  

Air Meals
Planning Budget
For the Month Ended December 31

  Budgeted meals (q)

22,000

  Revenue ($3.80q)

$

83,600

  Expenses:

      Raw materials ($1.80q)

39,600

      Wages and salaries ($6,400 + $0.20q)

10,800

      Utilities ($1,800 + $0.05q)

2,900

      Facility rent ($3,500)

3,500

      Insurance ($2,600)

2,600

      Miscellaneous ($400 + $0.10q)

2,600

  Total expense

62,000

  Net operating income

$

21,600

In December, 23,000 meals were actually served. The company’s flexible budget for this level of activity is as follows:

Air Meals
Flexible Budget
For the Month Ended December 31

  Budgeted meals (q)

23,000

  Revenue ($3.80q)

$

87,400

  Expenses:

      Raw materials ($1.80q)

41,400

      Wages and salaries ($6,400 + $0.20q)

11,000

      Utilities ($1,800 + $0.05q)

2,950

      Facility rent ($3,500)

3,500

      Insurance ($2,600)

2,600

      Miscellaneous ($400 + $0.10q)

2,700

  Total expense

64,150

  Net operating income

$

23,250

Air Meals 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 December appears below:

Explanation / Answer

Answer:-

Air Meals Activity Variances For the Month Ended December 31 Amount Revenue        3,800 F (87,400-83,600) Expenses: Raw materials        1,800 U Wages and Salaries 200 U (10800-11000) Utilities 50 U (2900-2950) Facility rent 0 None (2600-2600) Insurance 0 None (2600-2600) Miscellaneous 100 U (2600-2700) Total Expense        2,150 U Sum Net operating income        1,650

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.