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) 57 57 55 Revenue ($355.00q) $ 16,400 $ 20,235 $ 19,525 Expenses: Wages and salaries ($3,500 + $86.00q) 8,370 8,402 8,230 Fuel ($31.00q) 1,935 1,767 1,705 Airport fees ($850 + $31.00q) 2,482 2,617 2,555 Aircraft depreciation ($11.00q) 627 627 605 Office expenses ($230 + $1.00q) 455 287 285 Total expense 13,869 13,700 13,380 Net operating income $ 2,531 $ 6,535 $ 6,145 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

	Actual results	Revenue and spending variances		Flexible budget	Activity variances		Planning budget
Flights	57			57			55
Revenue	16400	3835	U	20235	710	F	19525
Expenses:
Wages and salaries	8370	32	F	8402	172	U	8230
Fuel	1935	168	U	1767	62	U	1705
Airport fees	2482	135	F	2617	62	U	2555
Aircraft depreciation	627	0	None	627	22	U	605
Office expenses	455	168	U	287	2	U	285
Total expense	13869	169	U	13700	320	U	13380
Net operating income	2531	4004	U	6535	390	F	6145