Question

Flight Café 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 July appears below:

Flight Café Planning Budget For the Month Ended July 31
Budgeted meals (q)		28,000
Revenue ($3.80q)	$	106,400
Expenses:
Raw materials ($2.30q)		64,400
Wages and salaries ($6,200 + $0.20q)		11,800
Utilities ($2,100 + $0.05q)		3,500
Facility rent ($3,300)		3,300
Insurance ($2,200)		2,200
Miscellaneous ($400 + $0.10q)		3,200
Total expense		88,400
Net operating income	$	18,000

In July, 29,000 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)		29,000
Revenue ($3.80q)	$	110,200
Expenses:
Raw materials ($2.30q)		66,700
Wages and salaries ($6,200 + $0.20q)		12,000
Utilities ($2,100 + $0.05q)		3,550
Facility rent ($3,300)		3,300
Insurance ($2,200)		2,200
Miscellaneous ($400 + $0.10q)		3,300
Total expense		91,050
Net operating income	$	19,150

Answer 1

		Flight Café Planning Budget For the Month Ended July 31	Flight Café Flexible Budget For the Month Ended July 31
Particulars	Amount $	Amount $
A)Revenue
Meals		28000*3.80	106400	29000*3.8		110200
	Total			106400			110200
B)Expences
Raw Material		28000*2.3	64400	29000*2.3		66700
Wages and Salaries		(28000*.2)+6200	11800	(29000*.2)+6200	12000
Utilities		(28000*.05)+2100	3500	(29000*.05)+2100	3550
Facility rent				3300			3300
Insurance				2200			2200
Miscellaneous		(28000*.1)+400	3200	(29000*.1)+400	3300
	Total			88400			91050
Net operating income (A-B)		18000			19150
diferrence in quantity for planing budget and flexible budget is 1000 q
diferrence in net operating income for planing budget and flexible budget is 1150 $