Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,200 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) 7,200 Revenue ($4.05q) $ 29,160 Expenses: Packing supplies ($0.35q) 2,520 Oyster bed maintenance ($3,500) 3,500 Wages and salaries ($2,000 + $0.25q) 3,800 Shipping ($0.65q) 4,680 Utilities ($1,260) 1,260 Other ($460 + $0.01q) 532 Total expense 16,292 Net operating income $ 12,868 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,200 Revenue $ 26,800 Expenses: Packing supplies 2,690 Oyster bed maintenance 3,360 Wages and salaries 4,210 Shipping 4,410 Utilities 1,070 Other 1,152 Total expense 16,892 Net operating income $ 9,908 Required: Calculate the company’s revenue and spending variances for August.

Answer 1

Quilcene Oysteria
flexible budget
For the Month Ended August 31
Actual pounds (q)		7,200
Revenue ($4.05q)		$ 29,160
Expenses:
Packing supplies ($0.35q)	2,520
Oyster bed maintenance ($3,500)	3,500
Wages and salaries ($2,000 + $0.25q)	3,800
Shipping ($0.65q)	4,680
Utilities ($1,260)	1,260
Other ($460 + $0.01q)	532
Total expense		$16,292
Net operating income		$12,868

Quilcene Oysteria
Income statement
For the Month Ended August 31
Actual pounds (q)		7,200
Revenue		$ 26,800
Expenses:
Packing supplies	2,690
Oyster bed maintenance	3,360
Wages and salaries	4,210
Shipping	4,410
Utilities	1,070
Other	1,152
Total expense		$16,892
Net operating income		$ 9,908

Quilcene Oysteria
Revenue and spending variances
For the Month Ended August 31
	ACTUAL RESULTS	FLEXIBLE BUDGET	REVENUE AND SPENDING VARIANCES
Pounds (q)	7,200	7,200
Revenue ($4.05q)	$ 26,800	$ 29,160	$2,360(U)
Expenses:
Packing supplies ($0.35q)	2,690	2,520	$170(U)
Oyster bed maintenance($3,500)	3,360	3,500	$140(F)
Wages and salaries ($2,000 + $0.25q)	4,210	3,800	$410(U)
Shipping ($0.65q)	4,410	4,680	$270(F)
Utilities ($1,260)	1,070	1,260	$190(F)
Other ($460 + $0.01q)	1,152	532	$620(U)
Total expense	$16,892	$16,292	$600(U)
Net operating income	$ 9,908	$ 12,868	$2,960(U)