Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,800 pounds of oysters in August. The company’s flexible budget for August appears below:

Quilcene Oysteria
Flexible Budget
For the Month Ended August 31
Actual pounds (q)		7,800
Revenue ($4.15q)	$	32,370
Expenses:
Packing supplies ($0.40q)		3,120
Oyster bed maintenance ($3,500)		3,500
Wages and salaries ($2,100 + $0.40q)		5,220
Shipping ($0.80q)		6,240
Utilities ($1,210)		1,210
Other ($480 + $0.01q)		558
Total expense		19,848
Net operating income	$	12,522

The actual results for August were as follows:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds		7,800
Revenue	$	27,400
Expenses:
Packing supplies		3,290
Oyster bed maintenance		3,360
Wages and salaries		5,630
Shipping		5,970
Utilities		1,020
Other		1,178
Total expense		20,448
Net operating income	$	6,952

Required:

Calculate the company’s revenue and spending variances for August.

Answer 1

	A	B	C = A - B
Particulars	As per Flexible Budget	As per Actual Result	Revenue or Spending Variance	Remarks
Revenue	$                32,370	$                     27,400	$                4,970	U
Expenses
Packing Supplies	$                   3,121	$                       3,290	$ 169	U
Oyster Bed Maintenance	$                   3,500	$                       3,360	$                    140	F
Wages & salaries	$                   5,220	$                       5,630	$ 410	U
Shipping	$                   6,240	$                       5,970	$                    270	F
Utilities	$                   1,210	$                       1,020	$                    190	F
Other	$                      558	$                       1,178	$ 620	U
Total expenses	$                19,848	$                     20,448	$ 600	U
Net operating income	$                12,522	$                       6,952	$                5,570	U

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