Olympia Bivalve farms and sells oysters in the Pacific Northwest. The company ha

Question

Olympia Bivalve farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,200 pounds of oysters in July. The company’s flexible budget for July appears below:

  

Olympia Bivalve
Flexible Budget
For the Month Ended July 31

  Actual pounds (q)

7,200

  Revenue ($4.25q)

$

30,600

  Expenses:

      Packing supplies ($0.35q)

2,520

      Oyster bed maintenance ($3,600)

3,600

      Wages and salaries ($2,600 + $0.40q)

5,480

      Shipping ($0.55q)

3,960

      Utilities ($1,220)

1,220

      Other ($500 + $0.01q)

572

  Total expense

17,352

  Net operating income

$

13,248

  

The actual results for July appear below:

  

Olympia Bivalve
Income Statement
For the Month Ended July 31

  Actual pounds

7,200

  Revenue

$

27,300

  Expenses:

      Packing supplies

2,690

      Oyster bed maintenance

3,460

      Wages and salaries

5,890

      Shipping

3,690

      Utilities

1,030

      Other

1,192

  Total expense

17,952

  Net operating income

$

9,348

Olympia Bivalve farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,200 pounds of oysters in July. The company’s flexible budget for July appears below:

Explanation / Answer

Add: Actual Operating Income

Plympia Bivalve Revenue and spending variance for the month ended July 31 Total Per Unit Impact Revenue 3300 0.458 Unfavourable Expenses: Packing Supplies -170 -0.024 Unfavourable Oyster bed maintenance 140 0.019 Favourable Wages and salaries -410 -0.057 Unfavourable Shipping 270 0.038 Favourable Utilities 190 0.026 Favourable Other -620 -0.086 Unfavourable Net varance 3,900 0.542 Unfavourable

Add: Actual Operating Income

9,348 Budgeted operating income 13,248

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