Exercise 9-3 (Algo) Revenue and Spending Variances [LO9-3] Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,500 pounds of oysters in August. The company's flexible budget for August appears below. Actual pounds (q) Revenue ($4.10g) Expenses: For Packing supplies ($0.40g) Oyster bed maintenance ($3,500) Wages and salaries ($2,200 $0.40g) Shipping ($0.55g) Utilities ($1,200) Other (5440+ $0.01g) Actual pounds Revenue Expenses: Total expense Net operating income The actual results for August were as follows: Quilcene Oysteria Flexible Budget the Month Ended August 31 Packing supplies Oyster bed maintenance Hages and salaries Shipping Utilities Other Revenue Expenses Quilcene Oysteria Income Statement For the Month Ended August 31 Total expense Net operating income Shipping Utilities Other Quilcene Oysteria Revenue and Spending Variances For the Month Ended August 31 Packing supplies Oyster bed maintenance Wages and salaries Total expense Net operating income 7,500 $ 30,750 3,000 3,500 5,200 4,125 1,200 515 17,540 $ 13,210 7,500 $ 27,200 Required: Calculate 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.) 3,170 3,360 5,610 3,855 1,010 1,135 18,140 $ 9,060

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Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance. 

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.