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)		61		61		59
Revenue ($340.00q)	$	16,400	$	20,740	$	20,060
Expenses:
Wages and salaries ($3,200 + $85.00q)		8,355		8,385		8,215
Fuel ($31.00q)		2,059		1,891		1,829
Airport fees ($860 + $33.00q)		2,768		2,873		2,807
Aircraft depreciation ($9.00q)		549		549		531
Office expenses ($250 + $1.00q)		479		311		309
Total expense		14,210		14,009		13,691
Net operating income	$	2,190	$	6,731	$	6,369

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	61			61			59
Revenue	$16,400			$20,740			$20,060
Expenses:
Wages and salaries	8,355			8,385			8,215
Fuel	2,059			1,891			1,829
Airport fees	2,768			2,873			2,807
Aircraft depreciation	549			549			531
Office expenses	479			311			309
Total expense	14,210			14,009			13,691
Net operating income	$2,190			$6,731			$6,369

Answer 1

			Flexible budget performance
			Actual	Revenue & spending		Flexible	Activity variance		planning
				variance		budget			budget
Flights			61			61			59
Revenue			16,400	4,340	U	20,740	680	F	20,060
expenses
Wages and salaries			8,355	30	F	8,385	170	U	8,215
Fuel			2,059	168	U	1,891	62	U	1,829
Airport fees			2,768	105	F	2,873	66	U	2,807
Aircraft depreciation			549	0	N	549	18	U	531
office expenses			479	168	U	311	2	U	309
total expense			14,210	201	U	14,009	318	U	13,691
net operating income			2,190	4,541	U	6,731	362	F	6,369