Flight Café prepares in-flight meals for airlines in its kitchen located next to a local airport. The company's planning budget for July
apppears below:
Flight Café
Planning Budget
For the Month Ended July 31
Budgeted meals (q)
Revenue ($4.00q)
Expenses:
Raw materials ($2.00q)
Wages and salaries ($6,300 + $0.20q)
Utilities ($1,900 + $0.95q)
Facility rent ($3,000)
Insurance ($2,500)
Miscellaneous ($300 + $0.10q)
Total expense
Net operating income
29,000
$ 116,000
58,000
12,100
3,350
3,000
2,500
3,200
82,150
$ 33,850
In July, 30,000 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)
Revenue ($4.00q)
Expenses:
Raw materials ($2.00q)
Wages and salaries ($6,300 + $0.20q)
Utilities ($1,900 + $0.05q)
Facility rent ($3,000)
Insurance ($2,500)
Miscellaneous ($300 + $0.10q)
Total expense
Net operating income
30,000
$ 120,000
60,000
12,300
3,400
3,000
2,500
3,300
84,500
$ 35,500
Required:
1. Calculate the company's activity variances for July.