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)		58		58		56
Revenue ($350.00q)	$	16,000	$	20,300	$	19,600
Expenses:
Wages and salaries ($3,600 + $86.00q)		8,556		8,588		8,416
Fuel ($31.00q)		1,966		1,798		1,736
Airport fees ($890 + $30.00q)		2,495		2,630		2,570
Aircraft depreciation ($9.00q)		522		522		504
Office expenses ($210 + $1.00q)		436		268		266
Total expense		13,975		13,806		13,492
Net operating income	$	2,025	$	6,494	$	6,108

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 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)		58		58		56
Revenue ($350.00q)	$	16,000	$	20,300	$	19,600
Expenses:
Wages and salaries ($3,600 + $86.00q)		8,556		8,588		8,416
Fuel ($31.00q)		1,966		1,798		1,736
Airport fees ($890 + $30.00q)		2,495		2,630		2,570
Aircraft depreciation ($9.00q)		522		522		504
Office expenses ($210 + $1.00q)		436		268		266
Total expense		13,975		13,806		13,492
Net operating income	$	2,025	$	6,494	$	6,108

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 FlyoversFlexible Budget Performance ReportFor the Month Ended July 31Actual ResultsFlexible BudgetPlanning BudgetFlights585856Revenue$16,000$20,300$19,600Expenses:Wages and salaries8,5568,5888,416Fuel1,9661,7981,736Airport fees2,4952,6302,570Aircraft depreciation522522504Office expenses436268266Total expense13,97513,80613,492Net operating income$2,025$6,494$6,108

Answer 1

			Flexible budget performance
			Actual	Revenue & spending		Flexible	Activity variance		planning
				variance		budget			budget
Flights			58			58			56
Revenue			16,000	4,300	U	20,300	700	F	19,600
expenses
Wages and salaries			8,556	32	F	8,588	172	U	8,416
Fuel			1,966	168	U	1,798	62	U	1,736
Airport fees			2,495	135	F	2,630	60	U	2,570
Aircraft depreciation			522	0	N	522	18	U	504
office expenses			436	168	U	268	2	U	266
total expense			13,975	169	U	13,806	314	U	13,492
net operating income			2,025	4,469	U	6,494	386	F	6,108