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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) 53 53 51 Revenue ($345.00q) $ 16,200 $ 18,285 $ 17,595 Expenses: Wages and salaries ($3,300 + $91.00q) 8,081 8,123 7,941 Fuel ($30.00q) 1,760 1,590 1,530 Airport fees ($820 + $32.00q) 2,386 2,516 2,452 Aircraft depreciation ($10.00q) 530 530 510 Office expenses ($240 + $1.00q) 461 293 291 Total expense 13,218 13,052 12,724 Net operating income $ 2,982 $ 5,233 $ 4,871 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.)

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Ans. VULCAN FLYOVERS
Flexible Budget Performance Report
For the Month Of July
Actual Results Spending variance Flexible Budget Activity variance Planning Budget
Flights 53 53 51
Revenue $16,200 $2,085 U $18,285 $690 F $17,595
Expenses:
Wages and salaries $8,081 $42 F $8,123 $182 U $7,941
Fuel $1,760 $796 U $1,590 $60 U $1,530
Airport fees $2,386 $130 F $2,516 $64 U $2,452
Aircraft depreciation $530 $0 none $530 $20 U $510
Office expenses $461 $168 U $293 $2 U $291
Total expenses $13,218 $166 U $13,052 $328 U $12,724
Net operating income $2,982 $2,251 U $5,233 $362 F $4,871
*Calculation of Flexible budget & Planning budget:
Flexible Budget Planning budget
Flights 53 51
Revenue $345 * 53 $345 * 51
Expenses:
Wages and salaries $3300 + ($91*53) $3300 + ($91*51)
Fuel $30 * 53 $30 * 51
Airport fees $820 + ($32 * 53) $820 + ($32 * 51)
Aircraft depreciation $10 * 53 $10 * 51
Office expenses $240 + ($1 * 53) $240 + ($1 * 51)
*Flexible budget is prepared on the basis of actual units.
*Fixed expenses remain same as planning budget.
Revenue & Spending variance   =   Actual results - Flexible budget
Activity variance =   Flexible budget - Planning budget
*Increase in expenses from flexible budget to actual results & Planning budget to flexible budget =   Unfavorable.
*Decrease in expenses from flexible budget to actual results & Planning budget to flexible budget =   Favorable.
*Increase in revenue or net income from flexible budget to actual results & Planning budget to flexible budget =   Favorable.
*Decrease in revenue or net income from flexible budget to actual results & Planning budget to flexible budget =   Unfavorable.
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