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 ($345.00q)	$	16,300	$	21,045	$	20,355
Expenses:
Wages and salaries ($3,800 + $91.00q)		9,309		9,351		9,169
Fuel ($32.00q)		2,118		1,952		1,888
Airport fees ($830 + $32.00q)		2,647		2,782		2,718
Aircraft depreciation ($9.00q)		549		549		531
Office expenses ($240 + $1.00q)		469		301		299
Total expense		15,092		14,935		14,605
Net operating income	$	1,208	$	6,110	$	5,750

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

Flexible budget performance report

	Actual	Revenue and spending variance	Flexible budget	Activity variance	Planning budget
Flights	61		61		59
Revenues	16300	4745 U	21045	690 F	20355
Expenses
Wages and salaries	9309	42 F	9351	182 U	9169
Fuel	2118	166 U	1952	64 U	1888
Airport fees	2647	135 F	2782	64 U	2718
Aircraft depreciation	549	0 None	549	18 U	531
Office expenses	469	168 U	301	2 U	299
Total expense	15092	157 U	14935	330 U	14605
Net operating income	1208	4902 U	6110	360 F	5750