Flight Café prepares in-flight meals for airlines in its kitchen located next to a local airport. The company’s planning budget for July appears below:

Flight Café prepares in-flight meals for airlines in its kitchen located next to a local airport. The company’s planning budget for July appears below:

Flight Café
Planning Budget
For the Month Ended July 31
Budgeted meals (q)		18,000
Revenue ($4.50q)	$	81,000
Expenses:
Raw materials ($2.40q)		43,200
Wages and salaries ($5,200 + $0.30q)		10,600
Utilities ($2,400 + $0.05q)		3,300
Facility rent ($4,300)		4,300
Insurance ($2,300)		2,300
Miscellaneous ($680 + $0.10q)		2,480
Total expense		66,180
Net operating income	$	14,820

In July, 17,800 actually meals were 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)		17,800
Revenue ($4.50q)	$	80,100
Expenses:
Raw materials ($2.40q)		42,720
Wages and salaries ($5,200 + $0.30q)		10,540
Utilities ($2,400 + $0.05q)		3,290
Facility rent ($4,300)		4,300
Insurance ($2,300)		2,300
Miscellaneous ($680 + $0.10q)		2,460
Total expense		65,610
Net operating income	$	14,490

Required:

1. Calculate the company’s activity variances for July. (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.)

Explanation

1.

Flight Café
Activity Variances
For the Month Ended July 31
	Flexible Budget		Planning Budget		Activity Variances
Meals		17,800		18,000
Revenue ($4.50q)	$	80,100	$	81,000	$	900	U
Expenses:
Raw materials ($2.40q)		42,720		43,200		480	F
Wages and salaries ($5,200 + $0.30q)		10,540		10,600		60	F
Utilities ($2,400 + $0.05q)		3,290		3,300		10	F
Facility rent ($4,300)		4,300		4,300		0	None
Insurance ($2,300)		2,300		2,300		0	None
Miscellaneous ($680 + $0.10q)		2,460		2,480		20	F
Total expense		65,610		66,180		570	F
Net operating income	$	14,490	$	14,820	$	330	U