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) |
30,000 |
| Revenue ($3.80q) |
$ |
114,000 |
| Expenses: |
| Raw materials ($2.20q) |
66,000 |
| Wages and salaries ($6,500 + $0.20q) |
12,500 |
| Utilities ($1,800 + $0.05q) |
3,300 |
| Facility rent ($3,800) |
3,800 |
| Insurance ($2,300) |
2,300 |
| Miscellaneous ($400 + $0.10q) |
3,400 |
| Total expense |
91,300 |
| Net operating income |
$ |
22,700 |
In July, 31,000 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) |
31,000 |
| Revenue ($3.80q) |
$ |
117,800 |
| Expenses: |
| Raw materials ($2.20q) |
68,200 |
| Wages and salaries ($6,500 + $0.20q) |
12,700 |
| Utilities ($1,800 + $0.05q) |
3,350 |
| Facility rent ($3,800) |
3,800 |
| Insurance ($2,300) |
2,300 |
| Miscellaneous ($400 + $0.10q) |
3,500 |
| Total expense |
93,850 |
| Net operating income |
$ |
23,950 |
Required:
1. Compute 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.)