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 ($355.00q)	$	16,200	$	21,655	$	20,945
Expenses:
Wages and salaries ($3,600 + $88.00q)		8,932		8,968		8,792
Fuel ($30.00q)		2,000		1,830		1,770
Airport fees ($870 + $32.00q)		2,697		2,822		2,758
Aircraft depreciation ($10.00q)		610		610		590
Office expenses ($220 + $1.00q)		449		281		279
Total expense		14,688		14,511		14,189
Net operating income	$	1,512	$	7,144	$	6,756

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	Revenue and Spending Variances		Flexible Budget	Activity Variances		Planning Budget
Flights	61			61			59
Revenue	$16,200	$5,455	U	$21,655	?	?	$20,945
Expenses:
Wages and salaries	8,932	36	F	8,968	?	?	8,792
Fuel	2,000	170	U	1,830	?	?	1,770
Airport fees	2,697	125	F	2,822	?	?	2,758
Aircraft depreciation	610	0	None	610	?	?	590
Office expenses	449	168	U	281	?	?	279
Total expense	14,688	177	U	14,511	?	?	14,189
Net operating income	$1,512	$5,632	U	$7,144	?	?	$6,756

I need help with the activity variances.

Answer 1

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