Accounting Question 9-2Question Details
EXERCISE9-2 Prepare a Report ShowingActivityVariances
Flight Cafe 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 July appears below:

Flight Cafe
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 + $0.1Oq) . 2,480

Total expense . 66,180
Net operating income . 14,820

In July, 17,800 meals were actually served. The company's flexible budget for this level of activity appears below:

Flight Cafe
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 + $0.1Oq) . 2,460
Total expense . 65,610
Net operating income . 14,490

Required:
1. Prepare a report showing the company's activity variances for July.
2. Which of the activity variances should be of concern to management? Explain.

Please answer question in this format, thanks
Flight Cafe
Activity Variances
For the Month Ended July 31
Planning Flexible Activity
Variance
Budget Budget

Meals.......................................... 18,000 17,800
Revenue ($???q) .
Expenses:
Raw materials ($???q) .
Wages and salaries ($??? +$O.??q) .
Utilities ($??? + $O.??q) .
Facility rent ($???) .
Insurance ($???) .
Miscellaneous ($??? + $O.??q) .
Total expense .
Net operating income .
Be sure each is label as U or F
2. Please fully explain your answer