Question

2). Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,600 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) 7,600 Revenue ($4.10q) $ 31,160 Expenses: Packing supplies ($0.25q) 1,900 Oyster bed maintenance ($3,300) 3,300 Wages and salaries ($2,200 + $0.30q) 4,480 Shipping ($0.75q) 5,700 Utilities ($1,230) 1,230 Other ($410 + $0.01q) 486 Total expense 17,096 Net operating income $ 14,064 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,600 Revenue $ 26,900 Expenses: Packing supplies 2,070 Oyster bed maintenance 3,160 Wages and salaries 4,890 Shipping 5,430 Utilities 1,040 Other 1,106 Total expense 17,696 Net operating income $ 9,204 Required: Calculate the company’s revenue and spending variances for August. (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.)

Answer 1

Ans.	QUILCENE OYSTERIA
	Revenue & Spending Variances
	For the Month Ended August 31
		Actual results	Revenue and Spending Variance	Flexible Budget
	Pounds	7600			7600
	Revenue	$26,900	$4,260	U	$31,160
	Less: Expenses:
	Packing supplies	$2,070	$170	U	$1,900
	Oyster bed maintenance	$3,160	$140	F	$3,300
	Wages and salaries	$4,890	$410	U	$4,480
	Shipping	$5,430	$270	F	$5,700
	Utilities	$1,040	$190	F	$1,230
	Other	$1,106	$620	U	$486
	Total expenses	$17,696	$600	U	$17,096
	Net Operating Income	$9,204	$4,860	U	$14,064
	Revenue & Spending variance   =   Actual results - Flexible budget
	*Flexible budget is prepared on the basis of actual units.
	*Fixed expenses remain same as planning budget.
	*Increase in revenue or net operating income and decrease in expenses from flexible budget to actual results =   Favorable.
	*Decrease in revenue or net operating income and increase in expenses from flexible budget to actual results =   Unfavorable.