Air Meals 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 December appears below:
Air Meals
Planning Budget
For the Month Ended December 31 |
| Budgeted meals (q) |
|
27,000 |
| Revenue ($3.80q) |
$ |
102,600 |
|
|
|
| Expenses: |
|
|
| Raw materials ($1.80q) |
|
48,600 |
| Wages and salaries ($6,500 + $.20q) |
|
11,900 |
| Utilities ($1,900 + $.05q) |
|
3,250 |
| Facility rent ($3,100) |
|
3,100 |
| Insurance ($2,900) |
|
2,900 |
| Miscellaneous ($500 + $.10q) |
|
3,200 |
|
|
|
| Total expense |
|
72,950 |
|
|
|
| Net operating income |
$ |
29,650 |
|
|
|
|
|
In December, 28,000 meals were actually served. The company's flexible budget for this level of activity is as follows:
|
Air Meals
Flexible Budget
For the Month Ended December 31 |
| Budgeted meals (q) |
|
28,000 |
| Revenue ($3.80q) |
$ |
106,400 |
|
|
|
| Expenses: |
|
|
| Raw materials ($1.80q) |
|
50,400 |
| Wages and salaries ($6,500 + $.20q) |
|
12,100 |
| Utilities ($1,900 + $.05q) |
|
3,300 |
| Facility rent ($3,100) |
|
3,100 |
| Insurance ($2,900) |
|
2,900 |
| Miscellaneous ($500 + $.10q) |
|
3,300 |
|
|
|
| Total expense |
|
75,100 |
|
|
|
| Net operating income |
$ |
31,300 |
|
|
|
|
| Required: |
| 1. |
Compute the company's activity variances for December. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
|