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Air Meals 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 December appears below: |
| Air Meals Planning Budget For the Month Ended December 31 |
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| Budgeted meals (q) | 20,000 | |
| Revenue ($3.80q) | $ | 76,000 |
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| Expenses: | ||
| Raw materials ($2.30q) | 46,000 | |
| Wages and salaries ($6,400 + $0.25q) | 11,400 | |
| Utilities ($2,100 + $0.05q) | 3,100 | |
| Facility rent ($3,800) | 3,800 | |
| Insurance ($2,600) | 2,600 | |
| Miscellaneous ($700 + $0.10q) | 2,700 | |
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| Total expense | 69,600 | |
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| Net operating income | $ | 6,400 |
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In December, 21,000 meals were actually served. The company s flexible budget for this level of activity is as follows: |
| Air Meals Flexible Budget For the Month Ended December 31 |
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| Budgeted meals (q) | 21,000 | |
| Revenue ($3.80q) | $ | 79,800 |
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| Expenses: | ||
| Raw materials ($2.30q) | 48,300 | |
| Wages and salaries ($6,400 + $0.25q) | 11,650 | |
| Utilities ($2,100 + $0.05q) | 3,150 | |
| Facility rent ($3,800) | 3,800 | |
| Insurance ($2,600) | 2,600 | |
| Miscellaneous ($700 + $0.10q) | 2,800 | |
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| Total expense | 72,300 | |
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| Net operating income | $ | 7,500 |
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| Required: | |
| 1. |
Compute the company s activity variances for December.
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