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Air Meals is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company’s planning budget for December appears below: |
| Air MealsPlanning BudgetFor the Month Ended December 31 | |||
| Budgeted meals (q) | 20,000 | ||
| Revenue ($3.80q) | 76,000 | ||
| Expenses: | |||
| Raw materials ($2.30q) | 46,000 | ||
| Wages and salaries ($6,400 + $0.25q) | 11,400 | ||
| Utilities ($2,100 + $0.05q) | 3,100 | ||
| Facility rent ($3,800) | 3,800 | ||
| Insurance ($2,600) | 2,600 | ||
| Miscellaneous ($700 + $0.10q) | 2,700 | ||
| Total expense | 69,600 | ||
| Net operating income | 6,400 |
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In December, 21,000 meals were actually served. The company’s flexible budget for this level of activity is as follows: |
| Air MealsFlexible BudgetFor the Month Ended December 31 |
| 21,000 |
| 79,800 |
| 48,300 |
| 11,650 |
| 3,150 |
| 2,800 |
| 72,300 |
| 7,500 |
| Required: |
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Compute the company’s activity variances for December.
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