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)		53		53		51
Revenue ($360.00q)	$	16,100	$	19,080	$	18,360
Expenses:
Wages and salaries ($3,100 + $87.00q)		7,677		7,711		7,537
Fuel ($32.00q)		1,862		1,696		1,632
Airport fees ($850 + $33.00q)		2,499		2,599		2,533
Aircraft depreciation ($11.00q)		583		583		561
Office expenses ($220 + $1.00q)		441		273		271
Total expense		13,062		12,862		12,534
Net operating income	$	3,038	$	6,218	$	5,826

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.

Answer 1

	Actual results	Revenue and spending variances		Flexible budget	Activity variances		Planning budget
Flights	53			53			51
Revenue	16100	2980	U	19080	720	F	18360
Expenses:
Wages and salaries	7677	34	F	7711	174	U	7537
Fuel	1862	166	U	1696	64	U	1632
Airpost fees	2499	100	F	2599	66	U	2533
Aircraft depreciation	583	0	None	583	22	U	561
Office expenses	441	168	U	273	2	U	271
Total expense	13062	200	U	12862	328	U	12534
Net operating income	3038	3180	U	6218	392	F	5826