Exercise 10-3 Prepare a Report Showing Revenue and Spending Variances [LO10-3] Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,700 pounds of oysters in August. The company’s flexible budget for August appears below: Quilcene Oysteria Flexible Budget For the Month Ended August 31 Actual pounds (q) 7,700 Revenue ($4.20q) $ 32,340 Expenses: Packing supplies ($0.35q) 2,695 Oyster bed maintenance ($3,000) 3,000 Wages and salaries ($2,300 + $0.40q) 5,380 Shipping ($0.55q) 4,235 Utilities ($1,250) 1,250 Other ($460 + $0.01q) 537 Total expense 17,097 Net operating income $ 15,243 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,700 Revenue $ 26,700 Expenses: Packing supplies 2,865 Oyster bed maintenance 2,860 Wages and salaries 5,790 Shipping 3,965 Utilities 1,060 Other 1,157 Total expense 17,697 Net operating income $ 9,003 Required: Compute the company’s revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Exercise 10-3 Prepare a Report Showing Revenue and Spending Variances [LO10-3]
Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,700 pounds of oysters in August. The company’s flexible budget for August appears below:
| Quilcene Oysteria Flexible Budget For the Month Ended August 31 |
||
| Actual pounds (q) | 7,700 | |
| Revenue ($4.20q) | $ | 32,340 |
| Expenses: | ||
| Packing supplies ($0.35q) | 2,695 | |
| Oyster bed maintenance ($3,000) | 3,000 | |
| Wages and salaries ($2,300 + $0.40q) | 5,380 | |
| Shipping ($0.55q) | 4,235 | |
| Utilities ($1,250) | 1,250 | |
| Other ($460 + $0.01q) | 537 | |
| Total expense | 17,097 | |
| Net operating income | $ | 15,243 |
The actual results for August appear below:
| Quilcene Oysteria Income Statement For the Month Ended August 31 |
||
| Actual pounds | 7,700 | |
| Revenue | $ | 26,700 |
| Expenses: | ||
| Packing supplies | 2,865 | |
| Oyster bed maintenance | 2,860 | |
| Wages and salaries | 5,790 | |
| Shipping | 3,965 | |
| Utilities | 1,060 | |
| Other | 1,157 | |
| Total expense | 17,697 | |
| Net operating income | $ | 9,003 |
Required:
Compute the company’s revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
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