1. Check your worksheet by changing revenue in cell D4 to $16.00; the cost of ingredients in cell D5 to $6.50; and wages and salaries in cell B6 to $10,000. The activity variance for net operating income should now be $850 U and spending variance for total expenses should be $410 U. If you do not get these answers, Locate the errors in your worksheet and correct them.
a. Find the activity variance for revenue? Describe this variance.
b. Find the spending variance for the cost of ingredients? Describe this variance.
2. Revise the data in your worksheet to reflect the results for the subsequent year:
Using the flexible budget performance report, briefly estimate the company's performance for the year and show where attention should be focused.