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Air meals is a company that prepares in-flight meals for

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Reference no: EM13483640

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
  Budgeted meals (q)
27,000
  Revenue ($3.80q) $ 102,600

  Expenses:

      Raw materials ($1.80q)
48,600
      Wages and salaries ($6,500 + $.20q)
11,900
      Utilities ($1,900 + $.05q)
3,250
      Facility rent ($3,100)
3,100
      Insurance ($2,900)
2,900
      Miscellaneous ($500 + $.10q)
3,200

  Total expense
72,950

  Net operating income $ 29,650

In December, 28,000 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
  Budgeted meals (q)
28,000
  Revenue ($3.80q) $ 106,400

  Expenses:

      Raw materials ($1.80q)
50,400
      Wages and salaries ($6,500 + $.20q)
12,100
      Utilities ($1,900 + $.05q)
3,300
      Facility rent ($3,100)
3,100
      Insurance ($2,900)
2,900
      Miscellaneous ($500 + $.10q)
3,300

  Total expense
75,100

  Net operating income $ 31,300

 

Required:
1.

Compute the company's activity variances for December. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
Air Meals
Activity Variances
For the Month Ended December 31
  Revenue $     F


  Expenses:

      Raw materials     U
      Wages and salaries     U
      Utilities     U
      Facility rent     None
      Insurance     None
      Miscellaneous     U


  Total expense     U


  Net operating income $     F


Reference no: EM13483640

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