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)		61		61		59
Revenue ($345.00q)	$	16,400	$	21,045	$	20,355
Expenses:
Wages and salaries ($3,700 + $86.00q)		8,914		8,946		8,774
Fuel ($34.00q)		2,236		2,074		2,006
Airport fees ($850 + $34.00q)		2,819		2,924		2,856
Aircraft depreciation ($9.00q)		549		549		531
Office expenses ($210 + $1.00q)		439		271		269
Total expense		14,957		14,764		14,436
Net operating income	$	1,443	$	6,281	$	5,919

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.)

Vulcan Flyovers Flexible Budget Performance Report For the Month Ended July 31 Actual Results Flexible Budget Planning Budget Flights 61 61 59 Revenue $16,400 $21,045 $20,355 Expenses: Wages and salaries 8,914 8,946 8,774 Fuel 2,236 2,074 2,006 Airport fees 2,819 2,924 2,856 Aircraft depreciation 549 549 531 Office expenses 439 271 269 Total expense 14,957 14,764 14,436 Net operating income $1,443 $6,281 $5,919

Answer 1

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.)

Vulcan Flyovers Flexible Budget Performance Report For the Month Ended July 31 Actual Results Revenue and spending variance Flexible Budget Activity variance Planning Budget Flights 61 61 59 Revenue $16,400 4645 U $21,045 690 F $20,355 Expenses: Wages and salaries 8,914 32 F 8,946 172 U 8,774 Fuel 2,236 162 U 2,074 68 U 2,006 Airport fees 2,819 105 F 2,924 68 U 2,856 Aircraft depreciation 549 0 None 549 18 U 531 Office expenses 439 168 U 271 2 U 269 Total expense 14,957 193 U 14,764 328 U 14,436 Net operating income $1,443 4838 U $6,281 362 F $5,919