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: Quilcene Oysteria Flexible Budget For the Month Ended August 31 Actual pounds (q) 7,500 Revenue ($4.25q) $ 31,875 Expenses: Packing supplies ($0.35q) 2,625 Oyster bed maintenance ($3,100) 3,100 Wages and salaries ($2,300 + $0.25q) 4,175 Shipping ($0.60q) 4,500 Utilities ($1,290) 1,290 Other ($420 + $0.01q) 495 Total expense 16,185 Net operating income $ 15,690 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,500 Revenue $ 26,800 Expenses: Packing supplies 2,795 Oyster bed maintenance 2,960 Wages and salaries 4,585 Shipping 4,230 Utilities 1,100 Other 1,115 Total expense 16,785 Net operating income $ 10,015 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.)
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.
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:
| Quilcene Oysteria | |
| Flexible Budget | |
| For the Month Ended August 31 | |
| Actual pounds (q) | 7,500 |
|---|---|
| Revenue ($4.25q) | $ 31,875 |
| Expenses: | |
| Packing supplies ($0.35q) | 2,625 |
| Oyster bed maintenance ($3,100) | 3,100 |
| Wages and salaries ($2,300 + $0.25q) | 4,175 |
| Shipping ($0.60q) | 4,500 |
| Utilities ($1,290) | 1,290 |
| Other ($420 + $0.01q) | 495 |
| Total expense | 16,185 |
| Net operating income | $ 15,690 |
The actual results for August appear below:
| Quilcene Oysteria | |
| Income Statement | |
| For the Month Ended August 31 | |
| Actual pounds | 7,500 |
|---|---|
| Revenue | $ 26,800 |
| Expenses: | |
| Packing supplies | 2,795 |
| Oyster bed maintenance | 2,960 |
| Wages and salaries | 4,585 |
| Shipping | 4,230 |
| Utilities | 1,100 |
| Other | 1,115 |
| Total expense | 16,785 |
| Net operating income | $ 10,015 |
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.)
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