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Exercise 9-4 Prepare a Flexible Budget Performance Report [LO9-4] Vulcan Flyovers offers scenic overflights of Mount...

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) 59 59 57
Revenue ($350.00q) $ 16,300 $ 20,650 $ 19,950
Expenses:
Wages and salaries ($3,100 + $86.00q) 8,142 8,174 8,002
Fuel ($31.00q) 1,997 1,829 1,767
Airport fees ($810 + $30.00q) 2,465 2,580 2,520
Aircraft depreciation ($11.00q) 649 649 627
Office expenses ($240 + $1.00q) 467 299 297
Total expense 13,720 13,531 13,213
Net operating income $ 2,580 $ 7,119 $ 6,737

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.)

Homework Answers

Answer #1
Actual Revenue and spending variances Flexible Budget Activity variances Planning Budget
Flights (q) 59 59 57
Revenue 16300 4350 U 20650 700 F 19950
Expenses:
Wages and salaries 8142 32 F 8174 172 U 8002
Fuel 1997 168 U 1829 62 U 1767
Airport fees 2465 115 F 2580 60 U 2520
Aircraft depreciation 649 0 None 649 22 U 627
Office expenses 467 168 U 299 2 U 297
Total expense 13720 189 U 13531 318 U 13213
Net operating income 2580 4539 U 7119 382 F 6737
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