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 ($350.00q)	$	16,100	$	21,350	$	20,650
Expenses:
Wages and salaries ($3,400 + $86.00q)		8,614		8,646		8,474
Fuel ($33.00q)		2,177		2,013		1,947
Airport fees ($870 + $32.00q)		2,722		2,822		2,758
Aircraft depreciation ($11.00q)		671		671		649
Office expenses ($240 + $1.00q)		469		301		299
Total expense		14,653		14,453		14,127
Net operating income	$	1,447	$	6,897	$	6,523

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	$16,100			$21,350			$20,650
Expenses:
Wages and salaries	8,614			8,646			8,474
Fuel	2,177			2,013			1,947
Airport fees	2,722			2,822			2,758
Aircraft depreciation	671			671			649
Office expenses	469			301			299
Total expense	14,653			14,453			14,127
Net operating income	$1,447			$6,897			$6,523

Answer 1

Vulcan Flyovers
Flexible Budget Performance Report
For the Month Ended July 31
	Actual Results	Revenue and spending variances		Flexible Budget	Activity variances		Planning Budget
Flights	61			61			59
Revenue	16100	5250	U	21350	700	F	20650
Expenses:
Wages and salaries	8,614	32	F	8,646	172	U	8,474
Fuel	2,177	164	U	2,013	66	U	1,947
Airport fees	2,722	100	F	2,822	64	U	2,758
Aircraft depreciation	671	0	None	671	22	U	649
Office expenses	469	168	U	301	2	U	299
Total expense	14,653	200	U	14,453	326	U	14,127
Net operating income	1447	5,450	U	6897	374	F	6523