Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 8,000 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) 8,000 Revenue ($4.20q) $ 33,600 Expenses: Packing supplies ($0.40q) 3,200 Oyster bed maintenance ($3,200) 3,200 Wages and salaries ($2,400 + $0.50q) 6,400 Shipping ($0.75q) 6,000 Utilities ($1,250) 1,250 Other ($470 + $0.01q) 550 Total expense 20,600 Net operating income $ 13,000 The actual results for August were as follows: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 8,000 Revenue $ 26,900 Expenses: Packing supplies 3,370 Oyster bed maintenance 3,060 Wages and salaries 6,810 Shipping 5,730 Utilities 1,060 Other 1,170 Total expense 21,200 Net operating income $ 5,700
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 8,000 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) | 8,000 |
|---|---|
| Revenue ($4.20q) | $ 33,600 |
| Expenses: | |
| Packing supplies ($0.40q) | 3,200 |
| Oyster bed maintenance ($3,200) | 3,200 |
| Wages and salaries ($2,400 + $0.50q) | 6,400 |
| Shipping ($0.75q) | 6,000 |
| Utilities ($1,250) | 1,250 |
| Other ($470 + $0.01q) | 550 |
| Total expense | 20,600 |
| Net operating income | $ 13,000 |
The actual results for August were as follows:
| Quilcene Oysteria | |
| Income Statement | |
| For the Month Ended August 31 | |
| Actual pounds | 8,000 |
|---|---|
| Revenue | $ 26,900 |
| Expenses: | |
| Packing supplies | 3,370 |
| Oyster bed maintenance | 3,060 |
| Wages and salaries | 6,810 |
| Shipping | 5,730 |
| Utilities | 1,060 |
| Other | 1,170 |
| Total expense | 21,200 |
| Net operating income | $ 5,700 |
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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