Annie's Homemade Ice Cream is preparing a planning budget for August. Its budgeted revenue per serving is $5.00. It has identified two cost drivers-number of servings and number of labor-hours. The company expects to sell 10,800 servings and to staff 700 employee labor-hours in August. Data concerning the company's cost formulas are shown below: Ingredients expense Salaries and wages expense Franchise fee Credit card processing fees Utilities expense Rent expense Equipment depreciation expense Other expenses Actual number of servings tual number of labor-hours Revenue Fixed Cost Per Month $ 7,000 Expenses: Cost of ingredients Salaries and wages $ 300 $ 3,000 $ 1,750 $ 4,200 Cost per Serving $ 1.25 $ 0.25 $ 0.09 $ 0.02 In August, the company actually sold 11,200 servings of ice cream and staffed 780 employee labor-hours. It's budgeted revenue per serving is $5.00. Assume Annie's Homemade's actual results for August were as follows: 11,200 788 $57,500 Cost per Labor-Hour $ 8.00 18,100 13,340
Annie's Homemade Ice Cream is preparing a planning budget for August. Its budgeted revenue per serving is $5.00. It has identified two cost drivers-number of servings and number of labor-hours. The company expects to sell 10,800 servings and to staff 700 employee labor-hours in August. Data concerning the company's cost formulas are shown below: Ingredients expense Salaries and wages expense Franchise fee Credit card processing fees Utilities expense Rent expense Equipment depreciation expense Other expenses Actual number of servings tual number of labor-hours Revenue Fixed Cost Per Month $ 7,000 Expenses: Cost of ingredients Salaries and wages $ 300 $ 3,000 $ 1,750 $ 4,200 Cost per Serving $ 1.25 $ 0.25 $ 0.09 $ 0.02 In August, the company actually sold 11,200 servings of ice cream and staffed 780 employee labor-hours. It's budgeted revenue per serving is $5.00. Assume Annie's Homemade's actual results for August were as follows: 11,200 788 $57,500 Cost per Labor-Hour $ 8.00 18,100 13,340
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Dinesh bhai
Transcribed Image Text:Required information
Annie's Homemade Ice Cream is preparing a planning budget for August. Its budgeted revenue per serving is $5.00. It
has identified two cost drivers-number of servings and number of labor-hours. The company expects to sell 10,800
servings and to staff 700 employee labor-hours in August. Data concerning the company's cost formulas are shown
below:
Ingredients expense
Salaries and wages expense
Franchise fee
Credit card processing fees
Utilities expense
Rent expense
Equipment depreciation expense
Other expenses
Actual number of servings
Actual number of labor-hours
Revenue
Expenses:
Cost of ingredients
Salaries and wages
Franchise fee
In August, the company actually sold 11,200 servings of ice cream and staffed 780 employee labor-hours. It's budgeted
revenue per serving is $5.00. Assume Annie's Homemade's actual results for August were as follows:
Credit card processing fees
Utilities
Rent and CAM
Equipment depreciation
Other expenses
Total expenses
Net operating income
Servings
Labor-hours
Revenue
Expenses:
Ingredients expense
Salaries and wages expense
Franchise fee
Fixed Cost Cost per
Per Month Serving
$ 1.25
$ 7,000
Credit card processing fees
Utilities expense
Rent expense
$ 300
$ 3,000
$ 1,750
$ 4,200
Equipment depreciation expense
Other expenses
Total expense
Net operating income
$ 0.25
$ 0.09
$ 0.02
Required:
Calculate the revenue and spending variances for August.
11,200
788
$ 57,500
Note: Indicate the effect of each variance by selecting "F" for favorable. "U" for unfavorable, and "None" for no effect (I.e., zero
varlance). Input all amounts as positive values.
Actual
Results
18,100
13,340
2,800
1,232
784
3,000
1,750
4,100
45,026
$ 12,474
Cost per
Labor-Hour
$ 8.00
Flexible
Budget
Variances
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Annie’s Homemade Ice Cream is preparing a planning budget for August. Its budgeted revenue per serving is $5.00. It has identified two cost drivers—number of servings and number of labor-hours. The company expects to sell 10,800 servings and to staff 700 employee labor-hours in August. Data concerning the company’s cost formulas are shown below: Fixed Cost Per MonthCost per ServingCost per Labor-HourIngredients expense $ 1.25 Salaries and wages expense$ 7,000 $ 8.00Franchise fee $ 0.25 Credit card processing fees $ 0.09 Utilities expense$ 300$ 0.02 Rent expense$ 3,000 Equipment
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