Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 8,000 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)		8,000
Revenue ($4.25q)	$	34,000
Expenses:
Packing supplies ($0.30q)		2,400
Oyster bed maintenance ($3,500)		3,500
Wages and salaries ($2,100 + $0.45q)		5,700
Shipping ($0.75q)		6,000
Utilities ($1,230)		1,230
Other ($490 + $0.01q)		570
Total expense		19,400
Net operating income	$	14,600

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds		8,000
Revenue	$	27,300
Expenses:
Packing supplies		2,570
Oyster bed maintenance		3,360
Wages and salaries		6,110
Shipping		5,730
Utilities		1,040
Other		1,190
Total expense		20,000
Net operating income	$	7,300

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