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)		54		54		52
Revenue ($345.00q)	$	16,300	$	18,630	$	17,940
Expenses:
Wages and salaries ($3,700 + $91.00q)		8,572		8,614		8,432
Fuel ($31.00q)		1,842		1,674		1,612
Airport fees ($870 + $31.00q)		2,434		2,544		2,482
Aircraft depreciation ($10.00q)		540		540		520
Office expenses ($250 + $1.00q)		472		304		302
Total expense		13,860		13,676		13,348
Net operating income	$	2,440	$	4,954	$	4,592

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

Vulcan Flyovers
Operating Data
For the Month Ended July 31
	Actual Results		Revenue and spending variance	Flexible Budget		Activity variance	Planning Budget
Flights (q)		54			54			52
Revenue ($345.00q)	$	16,300	2330 U	$	18,630	690 F	$	17,940
Expenses:
Wages and salaries ($3,700 + $91.00q)		8,572	42 F		8,614	182 U		8,432
Fuel ($31.00q)		1,842	168 U		1,674	62 U		1,612
Airport fees ($870 + $31.00q)		2,434	110 F		2,544	62 U		2,482
Aircraft depreciation ($10.00q)		540	0 None		540	20 U		520
Office expenses ($250 + $1.00q)		472	168 U		304	2 U		302
Total expense		13,860	184 U		13,676	328 U		13,348
Net operating income	$	2,440	2514 U	$	4,954	362 F	$	4,592