Questions: Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,400 pounds of oysters in August. The company's flexible budget for August appears below: Quilcene Oysteria Flexible Budget For the Month Ended August Actual pounds (q) 7,400 Revenue ( 4.10 q ) 30,340 Expenses: Packing supplies ( 0.35 q ) 2,590 Oyster bed maintenance ( 3,200 ) 3,200 Wages and salaries ( 2,200+ 0.30 q) 4,420 Shipping (0.80q) 5,920 Utilities ( 1,220) 1,220 Other (510 + 0.01q) 584 Total expense 17,934 Net operating income 12,406 The actual results for August appear below: Quilcene Oysteria Income Statement For the Month Ended August 31 Actual pounds 7,400 Revenue 26,900 Expenses: 2,760 Packing supplies 3,060 Oyster bed maintenance 4,830 Wages and salaries 5,650 Shipping 1,030 Utilities 1,204 Other 18,534 Total expense 8,366 Net operating income Required: Calculate the company's revenue and spending variances for August. Note: 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.

To calculate the company's revenue and spending variances for August, we need to compare the actual results with the flexible budget. The variances will be determined by subtracting the budgeted amounts from the actual amounts. A positive variance for revenue is favorable (F), while a positive variance for expenses is unfavorable (U).

Flexible Budget Revenue: \$30,340
Actual Revenue: \$26,900

Revenue Variance:
\[ \text{Revenue Variance} = \text{Actual Revenue} - \text{Flexible Budget Revenue} \]
\[ \text{Revenue Variance} = \$26,900 - \$30,340 \]
\[ \text{Revenue Variance} = -\$3,440 \]

Since the actual revenue is less than the budgeted revenue, this is an unfavorable variance (U).

We will calculate the spending variances for each expense category.

1. Packing Supplies: Flexible Budget: \$2,590
   Actual: \$2,760
   \[ \text{Packing Supplies Variance} = \text{Actual} - \text{Flexible Budget} \]
   \[ \text{Packing Supplies Variance} = \$2,760 - \$2,590 \]
   \[ \text{Packing Supplies Variance} = \$170 \]
   This is an unfavorable variance (U).

2. Oyster Bed Maintenance: Flexible Budget: \$3,200
   Actual: \$3,060
   \[ \text{Oyster Bed Maintenance Variance} = \text{Actual} - \text{Flexible Budget} \]
   \[ \text{Oyster Bed Maintenance Variance} = \$3,060 - \$3,200 \]
   \[ \text{Oyster Bed Maintenance Variance} = -\$140 \]
   This is a favorable variance (F).

3. Wages and Salaries: Flexible Budget: \$4,420
   Actual: \$4,830
   \[ \text{Wages and Salaries Variance} = \text{Actual} - \text{Flexible Budget} \]
   \[ \text{Wages and Salaries Variance} = \$4,830 - \$4,420 \]
   \[ \text{Wages and Salaries Variance} = \$410 \]
   This is an unfavorable variance (U).

4. Shipping: Flexible Budget: \$5,920
   Actual: \$5,650
   \[ \text{Shipping Variance} = \text{Actual} - \text{Flexible Budget} \]
   \[ \text{Shipping Variance} = \$5,650 - \$5,920 \]
   \[ \text{Shipping Variance} = -\$270 \]
   This is a favorable variance (F).

5. Utilities: Flexible Budget: \$1,220
   Actual: \$1,030
   \[ \text{Utilities Variance} = \text{Actual} - \text{Flexible Budget} \]
   \[ \text{Utilities Variance} = \$1,030 - \$1,220 \]
   \[ \text{Utilities Variance} = -\$190 \]
   This is a favorable variance (F).

6. Other: Flexible Budget: \$584
   Actual: \$1,204
   \[ \text{Other Variance} = \text{Actual} - \text{Flexible Budget} \]
   \[ \text{Other Variance} = \$1,204 - \$584 \]
   \[ \text{Other Variance} = \$620 \]
   This is an unfavorable variance (U).

• Revenue Variance: \$3,440 U
• Packing Supplies Variance: \$170 U
• Oyster Bed Maintenance Variance: \$140 F
• Wages and Salaries Variance: \$410 U
• Shipping Variance: \$270 F
• Utilities Variance: \$190 F
• Other Variance: \$620 U

In summary, the company experienced an unfavorable revenue variance and mixed spending variances, with some categories being favorable and others unfavorable.