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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