Question

Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 83 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below:

	Fixed Cost per Month			Cost per Cruise			Cost per Passenger
Vessel operating costs	$	6,300		$	474.00		$	3.10
Advertising	$	2,600
Administrative costs	$	5,500		$	39.00		$	1.50
Insurance	$	3,700

For example, vessel operating costs should be $6,300 per month plus $474.00 per cruise plus $3.10 per passenger. The company’s sales should average $32.00 per passenger. In July, the company provided 52 cruises for a total of 3,100 passengers.

Required:

Prepare the company’s flexible budget for July.

Answer 1