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)		59		59		57
Revenue ($340.00q)	$	16,200	$	20,060	$	19,380
Expenses:
Wages and salaries ($3,100 + $92.00q)		8,484		8,528		8,344
Fuel ($32.00q)		2,054		1,888		1,824
Airport fees ($890 + $34.00q)		2,791		2,896		2,828
Aircraft depreciation ($10.00q)		590		590		570
Office expenses ($240 + $1.00q)		467		299		297
Total expense		14,386		14,201		13,863
Net operating income	$	1,814	$	5,859	$	5,517

  

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. Complete the flexible budget performance report abstract for July. (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

			Flexible budget performance
			Actual	Revenue & spending		Flexible	Activity variance		planning
				variance		budget			budget
Revenue			16,200	3,860	U	20,060	1,775	F	18,285
expenses
Wages and salaries			8,484	44	F	8,528	184	U	8,344
Fuel			2,054	166	U	1,888	64	U	1,824
Airport fees			2,791	105	F	2,896	68	U	2,828
Aircraft depreciation			590	0	N	590	20	U	570
office expenses			467	168	U	299	2	U	297
total expense			14,386	185	U	14,201	338	U	13,863
net operating income			1,814	4,045	U	5,859	1,437	F	4,422