Question

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,700 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)		7,700
Revenue ($4.20q)	$	32,340
Expenses:
Packing supplies ($0.40q)		3,080
Oyster bed maintenance ($3,200)		3,200
Wages and salaries ($2,500 + $0.45q)		5,965
Shipping ($0.75q)		5,775
Utilities ($1,270)		1,270
Other ($490 + $0.01q)		567
Total expense		19,857
Net operating income	$	12,483

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds		7,700
Revenue	$	26,600
Expenses:
Packing supplies		3,250
Oyster bed maintenance		3,060
Wages and salaries		6,375
Shipping		5,505
Utilities		1,080
Other		1,187
Total expense		20,457
Net operating income	$	6,143

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

Quilcene Oysteria
Revenue and Spending Variances For the Month Ended August 31
		Actual Results	Flexible Budget	Revenue and Spending Variances
Pounds		7700	7700
Revenue ($4.20 q )	7700*4.20	26600	32340	$        5,740	U
Expenses:
Packing supplies		3,250	3080	$           170	U
Oyster bed maintenance		3,060	3200	$           140	F
Wages and salaries		6,375	5965	$           410	U
Shipping		5,505	5775	$           270	F
Utilities		1,080	1270	$           190	F
Other		1,187	567	$           620	U
Total expense		20,457	19857	$           600	U
Net operating income	$	6,143	12483	$        6,340	F