EXERCISE 9-2 Activity Variances LO9-2Flight 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 CaféPlanning BudgetFor the Month Ended July 31Budgeted meals (q).Revenue ($4.50g) ...18,000$81,000Expenses:Raw materials ($2.40q)Wages and salaries ($5,200 + $0.30q)Utilities ($2,400 + $0.05g)Facility rent ($4,300)Insurance ($2,300) ...Miscellaneous ($680 + $0.10g)43,20010,6003,3004,3002,300....2,48066,180$14,820Total expenseNet operating incomein July, 17,800 meals were actually served. The company's flexible budget for this level of activityppears below:Flight CaféFlexible BudgetFor the Month Ended July 31Budgeted meals (q) .17,800Revenue ($4.50q) ...$80,100Expenses:Raw materials ($2.40q) ...Wages and salaries ($5,200 + $0.30q)Utilities ($2,400 + $0.05q)Facility rent ($4,300)Insurance ($2,300)..Miscellaneous ($680 + $0.10g)42,72010,5403,2904,3002,3002,460Total expense65,610Net operating income$14,490 EXERCISE 9-9 Planning Budget LO9-1Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facilitynear Montreal. The following table provides estimates concerning the company's costs:Fixed CostCost perper Month Car Washed$0.80$0.15$0.20$0.30Cleaning supplies ...Electricity$1,200MaintenanceWages and salariesDepreciationRentAdministrative expenses.$5,000$6,000$8,000$4,000$0.10For example, electricity costs should be $1,200 per month plus $0.15 per car washed. The companyexpects to wash 9,000 cars in August and to collect an average of $4.90 per car washed.Required:Using Exhibit 9-2 as your guide, prepare the company's planning budget for August.

Solution: Planning budget is prepared based on planned volume of the activity. It is different from…

Flight Café prepares in-flight meals for airlines in its kitchen located next to a local airpo 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 ($4.50g) ... $81,000 Expenses: Raw materials ($2.40q). Wages and salaries ($5,200 + $0.30q) Utilities ($2,400+ $0.05g) Facility rent ($4,300) Insurance ($2,300) ... Miscellaneous ($680 + $0.10q) 43,200 10,600 3,300 4,300 2,300 ... 2,480 Total expense 66,180 Net operating income $14,820 n July, 17,800 meals were actually served. The company's flexible budget for this level of activi mppears 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)... Wages and salaries ($5,200 + $0.30q) Utilities ($2,400 + $0.05g). Facility rent ($4,300) Insurance ($2,300) .. Miscellaneous ($680 + $0.10g) 42,720 10,540 3,290 4,300 2,300 2,460 Total expense 65,610 Not oporating incomo t14 400

Flight Café prepares in-flight meals for airlines in its kitchen located next to a local airpo 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 ($4.50g) ... $81,000 Expenses: Raw materials ($2.40q). Wages and salaries ($5,200 + $0.30q) Utilities ($2,400+ $0.05g) Facility rent ($4,300) Insurance ($2,300) ... Miscellaneous ($680 + $0.10q) 43,200 10,600 3,300 4,300 2,300 ... 2,480 Total expense 66,180 Net operating income $14,820 n July, 17,800 meals were actually served. The company's flexible budget for this level of activi mppears 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)... Wages and salaries ($5,200 + $0.30q) Utilities ($2,400 + $0.05g). Facility rent ($4,300) Insurance ($2,300) .. Miscellaneous ($680 + $0.10g) 42,720 10,540 3,290 4,300 2,300 2,460 Total expense 65,610 Not oporating incomo t14 400

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 15E: Cost of goods sold budget Delaware Chemical Company uses oil to produce two types of plastic...

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