Flight Café prepares in-flight meals for airlines in its kitchen located next to
ID: 2556370 • Letter: F
Question
Flight Café prepares in-flight meals for airlines in its kitchen located next to a local airport. The company’s planning budget for July appears below:
In July, 27,000 actually meals were served. The company’s flexible budget for this level of activity appears below:
Required:
1. Calculate the company’s 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 Café Planning Budget For the Month Ended July 31 Budgeted meals (q) 26,000 Revenue ($4.00q) $ 104,000 Expenses: Raw materials ($2.00q) 52,000 Wages and salaries ($6,200 + $0.20q) 11,400 Utilities ($2,100 + $0.05q) 3,400 Facility rent ($3,300) 3,300 Insurance ($2,000) 2,000 Miscellaneous ($600 + $0.10q) 3,200 Total expense 75,300 Net operating income $ 28,700Explanation / Answer
Flight Cafe Activity Variances For the month Ended July 31 Planning budget Flexible budget Activity variances Revenue 104000 108000 4000 F Exprenses: Raw Materials 52000 54000 2000 U Wages and Salaries 11400 11600 200 U Utilities 3400 3450 50 U Facility rent 3300 3300 0 None Insurance 2000 2000 0 None Miscellaneous 3200 3300 100 U Total expense 75300 77650 2350 U Net operating income 28700 30350 1650 F
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