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)		54		54		52
Revenue ($345.00q)	$	16,000	$	18,630	$	17,940
Expenses:
Wages and salaries ($3,200 + $86.00q)		7,812		7,844		7,672
Fuel ($33.00q)		1,946		1,782		1,716
Airport fees ($880 + $33.00q)		2,547		2,662		2,596
Aircraft depreciation ($9.00q)		486		486		468
Office expenses ($220 + $1.00q)		442		274		272
Total expense		13,233		13,048		12,724
Net operating income	$	2,767	$	5,582	$	5,216

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.

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.)

Answer 1

Answer-

VULCAN FLYOVERS
FLEXIBLE BUDGET PERFORMANCE REPORT
FOR THE MONTH ENDED JULY 31
PARTICULARS	ACTUAL RESULTS	VARIANCES	REMARK	FLEXIBLE BUDGET	VARIANCES	REMARK	PLANNING BUDGET
	$	$		$	$		$
Flights	54			54			52
Revenue	16000	-2630	Unfavorable	18630	690	Favorable	17940
Expenses:-
Wages & Salaries	7812	32	Favorable	7844	-172	Unfavorable	7672
Fuel	1946	-164	Unfavorable	1782	-66	Unfavorable	1716
Airport fees	2547	115	Favorable	2662	-66	Unfavorable	2596
Aircraft depreciation	486	0	None	486	-18	Unfavorable	468
Office expenses	442	-168	Unfavorable	274	-2	Unfavorable	272
Total expenses	13233	-185	Unfavorable	13048	-324	Unfavorable	12724
Net operating income	2767	-2815	Unfavorable	5582	366	Favorable	5216