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)		56		56		54
Revenue ($360.00q)	$	16,200	$	20,160	$	19,440
Expenses:
Wages and salaries ($3,200 + $87.00q)		8,038		8,072		7,898
Fuel ($33.00q)		2,012		1,848		1,782
Airport fees ($890 + $32.00q)		2,562		2,682		2,618
Aircraft depreciation ($9.00q)		504		504		486
Office expenses ($210 + $1.00q)		434		266		264
Total expense		13,550		13,372		13,048
Net operating income	$	2,650	$	6,788	$	6,392

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
Flexible Budget Performance Report
For the Month Ended July 31
	Actual Results			Flexible Budget			Planning Budget
Flights	56			56			54
Revenue	$16,200			$20,160			$19,440
Expenses:
Wages and salaries	8,038			8,072			7,898
Fuel	2,012			1,848			1,782
Airport fees	2,562			2,682			2,618
Aircraft depreciation	504			504			486
Office expenses	434			266			264
Total expense	13,550			13,372			13,048
Net operating income	$2,650			$6,788			$6,392

Answer 1

	Actual results	Revenue and spending variances		Flexible budget	Activity variances		Planning budget
Flights	56			56			54
Revenue	16200	3960	U	20160	720	F	19440
Expenses:
Wages and salaries	8038	34	F	8072	174	U	7898
Fuel	2012	164	U	1848	66	U	1782
Airpost fees	2562	120	F	2682	64	U	2618
Aircraft depreciation	504	0	None	504	18	U	486
Office expenses	434	168	U	266	2	U	264
Total expense	13550	178	U	13372	324	U	13048
Net operating income	2650	4138	U	6788	396	F	6392