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Pink Tours operates jeep tours in the heart of Death Valley. The company bases its budgets...

Pink Tours operates jeep tours in the heart of Death Valley. The company bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company uses the following data in its budgeting:

Fixed element
per month

Variable element
per guest

Variable element per jeep

Revenue

$

0

$

166

$

0

Tour guide wages

$

0

$

0

$

133

Vehicle expenses

$

4,650

$

23

$

76

Administrative expenses

$

3,350

$

16

$

0

In March, the company budgeted for 340 guests and 106 jeeps. The actual activity for the month was 415 guests and 156 jeeps.

Required:

Prepare the company's flexible budget for the actual level of activity in March.

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Answer #1
Flexible Budget
actual guests 415
actual jeep 156
Revenue (166*415) 68890
expenses
tour guide wages (133*156) 20748
vehicle expenses 4650+(23*415)+(76*156) 26051
administrative expenses 3350+(16*415) 9990
Net operating income 12101
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