Question

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below: Vulcan Flyovers Operating Data For the Month Ended July 31 Actual Results Flexible Budget Planning Budget Flights (q) 57 57 55 Revenue ($350.00q) $ 16,200 $ 19,950 $ 19,250 Expenses: Wages and salaries ($3,200 + $88.00q) 8,180 8,216 8,040 Fuel ($34.00q) 2,100 1,938 1,870 Airport fees ($840 + $32.00q) 2,539 2,664 2,600 Aircraft depreciation ($10.00q) 570 570 550 Office expenses ($210 + $1.00q) 435 267 265 Total expense 13,824 13,655 13,325 Net operating income $ 2,376 $ 6,295 $ 5,925 The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount. Required: 1. Prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances. (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.)

Answer 1

Vulcan Flyovers Flexible Budget Performance Report For the Month Ended July 31 Revenue and Spending Variances Activity Variances Revenue $3,750 $700 Expenses Wages and salaries $36 $176 Fuel $162 $68 Airport fees $125 $64 Aircraft depreciation o Office expenses $168 $2 Total expense $169 $330 Netoperating home $3,919 $370

Revenue and Spending Variances Actual Results - Flexible Budget = Revenue and Spending Variances Flights 57 57 Revenue $16,200 - $19,950 = $3,750 Expenses: Wages and salaries $8,180 - $8,216 = $36 Fuel $2,100 - $1,938 = $162 Airport fees $2,539 - $2,664 = $125 Aircraft depreciation $570 - $570 Office expense $435 - $267 $168 C CZ Total expense $13,824 |- $13,655 1 = $169 Netoperating income $2,376 - $6,295 = $3,919

Activity Variances Flexible Budget - Planning Budget = | Activity Variances Flights 5755 Revenue $19,950 $19,250 $700 Expenses: Wages and salaries $8,216 - $8,040 $176 Fuel $1,938 $1,870 $68 Airport fees $2,664 $2,600 lu Aircraft depreciation $570 $550 Office expense $267 - $265 Total expense $13,655 $13,325 $330 Net operating income $6,295 $5,925 $370