Question

Exercise 9-4 Prepare a Flexible Budget Performance Report [LO9-4]

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)		56		56		54
Revenue ($345.00q)	$	16,300	$	19,320	$	18,630
Expenses:
Wages and salaries ($3,700 + $91.00q)		8,754		8,796		8,614
Fuel ($32.00q)		1,958		1,792		1,728
Airport fees ($810 + $33.00q)		2,528		2,658		2,592
Aircraft depreciation ($8.00q)		448		448		432
Office expenses ($250 + $1.00q)		474		306		304
Total expense		14,162		14,000		13,670
Net operating income	$	2,138	$	5,320	$	4,960

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