Question

Exercise 9-4 Prepare a Flexible Budget Performance Report [LO9-4]

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 ($345.00q) $ 16,300 $ 18,630 $ 17,940 Expenses: Wages and salaries ($3,500 + $88.00q) 8,216 8,252 8,076 Fuel ($34.00q) 1,998 1,836 1,768 Airport fees ($830 + $34.00q) 2,541 2,666 2,598 Aircraft depreciation ($10.00q) 540 540 520 Office expenses ($240 + $1.00q) 462 294 292 Total expense 13,757 13,588 13,254 Net operating income $ 2,543 $ 5,042 $ 4,686 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

	Actual	Revenue and spending variances		Flexible budget	Activity variances		Planning budget
Flights	54			54			52
Revenue	16300	2330	U	18630	690	F	17940
Expenses:
Wages and salaries	8216	36	F	8252	176	U	8076
Fuel	1998	162	U	1836	68	U	1768
Airport fees	2541	125	F	2666	68	U	2598
Aircraft depreciation	540	0	None	540	20	U	520
Office expenses	462	168	U	294	2	U	292
Total expense	13757	169	U	13588	334	U	13254
Net operating income	2543	2499	U	5042	356	F	4686