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)		53		53		51
Revenue ($355.00q)	$	16,300	$	18,815	$	18,105
Expenses:
Wages and salaries ($3,400 + $90.00q)		8,130		8,170		7,990
Fuel ($33.00q)		1,913		1,749		1,683
Airport fees ($840 + $32.00q)		2,426		2,536		2,472
Aircraft depreciation ($9.00q)		477		477		459
Office expenses ($210 + $1.00q)		431		263		261
Total expense		13,377		13,195		12,865
Net operating income	$	2,923	$	5,620	$	5,240

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	53			53			51
Revenue	$16,300			$18,815			$18,105
Expenses:
Wages and salaries	8,130			8,170			7,990
Fuel	1,913			1,749			1,683
Airport fees	2,426			2,536			2,472
Aircraft depreciation	477			477			459
Office expenses	431			263			261
Total expense	13,377			13,195			12,865
Net operating income

Answer 1

For the Month Ended July 31
	Actual Results	Revenue and spending variance		Flexible Budget	Activity variance		Planning Budget
Flights	53			53			51
Revenue	$16,300	2515	U	$18,815	710	F	$18,105
Expenses:
Wages and salaries	8,130	40	F	8,170	180	U	7,990
Fuel	1,913	164	U	1,749	66	U	1,683
Airport fees	2,426	110	F	2,536	64	U	2,472
Aircraft depreciation	477	0 None		477	18	U	459
Office expenses	431	168	U	263	2	U	261
Total expense	13,377	182	U	13,195	330	U	12,865
Net operating income	2923	2697	U	5620	380	F	5240