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 ($345.00q)

$

16,200    

$

19,665    

$

18,975    

  Expenses:

       Wages and salaries ($3,400 + $91.00q)

8,545  

8,587    

8,405    

       Fuel ($32.00q)

1,990  

1,824    

1,760    

       Airport fees ($860 + $35.00q)

2,715    

2,855    

2,785    

       Aircraft depreciation ($10.00q)

570    

570    

550    

       Office expenses ($230 + $1.00q)

455    

287    

285    

  Total expense

14,275  

14,123    

13,785    

  Net operating income

$

1,925  

$

5,542    

$

5,190    

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.

Complete the flexible budget performance report abstract for July. (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
Flexible Budget Performance Report
For the Month Ended July 31
	Revenue and Spending Variances		Activity Variances
Revenue
Expenses:
Wages and salaries
Fuel
Airport fees
Aircraft depreciation
Office expenses
Total expense
Net operating income

Answer 1

Flexible Budget Performance Report
For the Month Ended July 31
	Actual	Revenue and Spending Variances		Flexible budget	Activity Variances		Planning budget
Revenue	16200	3465	U	19665	690	F	18975
Expenses:
Wages and salaries	8545	42	F	8587	182	U	8405
Fuel	1990	166	U	1824	64	U	1760
Airport fees	2715	140	F	2855	70	U	2785
Aircraft depreciation	570	0	None	570	20	U	550
Office expenses	455	168	U	287	2	U	285
Total expense	14275	152	U	14123	338	U	13785
Net operating income	1925	3617	U	5542	352	F	5190