Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 8,000 pounds of oysters in August. The company’s flexible budget for August appears below:

Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 8,000 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)		8,000
Revenue ($4.00q)	$	32,000
Expenses:
Packing supplies ($0.50q)		4,000
Oyster bed maintenance ($3,200)		3,200
Wages and salaries ($2,900 + $0.30q)		5,300
Shipping ($0.80q)		6,400
Utilities ($830)		830
Other ($450 + $0.05q)		850
Total expense		20,580
Net operating income	$	11,420

The actual results for August appear below:

Quilcene Oysteria
Income Statement
For the Month Ended August 31
Actual pounds		8,000
Revenue	$	35,200
Expenses:
Packing supplies		4,200
Oyster bed maintenance		3,100
Wages and salaries		5,640
Shipping		6,950
Utilities		810
Other		980
Total expense		21,680
Net operating income	$	13,520

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.)

 

Explanation

Quilcene Oysteria
Revenue and Spending Variances
For the Month Ended August 31
	Actual Results		Flexible Budget		Revenue and Spending Variances
Pounds		8,000		8,000
Revenue ($4.00q)	$	35,200	$	32,000	$	3,200	F
Expenses:
Packing supplies ($0.50q)		4,200		4,000		200	U
Oyster bed maintenance ($3,200)		3,100		3,200		100	F
Wages and salaries ($2,900 + $0.30q)		5,640		5,300		340	U
Shipping ($0.80q)		6,950		6,400		550	U
Utilities ($830)		810		830		20	F
Other ($450 + $0.05q)		980		850		130	U
Total expense		21,680		20,580		1,100	U
Net operating income	$	13,520	$	11,420	$	2,100	F