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) 54 54 52 Revenue ($360.00q) $ 16,000 $ 19,440 $ 18,720 Expenses: Wages and salaries ($3,200 + $89.00q) 7,968 8,006 7,828 Fuel ($32.00q) 1,894 1,728 1,664 Airport fees ($820 + $32.00q) 2,438 2,548 2,484 Aircraft depreciation ($10.00q) 540 540 520 Office expenses ($210 + $1.00q) 432 264 262 Total expense 13,272 13,086 12,758 Net operating income $ 2,728 $ 6,354 $ 5,962 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

Flexible budget performance Results
	Actual Budget	Revenue and Spending variances		Flexible Budget	Actvity variances		Planning Budget
Flights	54			54			52
Revenue	16000	3440	U	19440	720	F	18720
Expenses:
Wages and Salaries	7968	38	F	8006	178	U	7828
Fuel	1894	166	U	1728	64	U	1664
Airport Fees	2438	110	F	2548	64	U	2484
Aircraft Depreciation	540	0	None	540	20	U	520
Office Expense	432	168	U	264	2	U	262
Total Expenses	13272	186	U	13086	328	U	12758
Net operating Income	2728	3626	U	6354	392	F	5962