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) $ 16,100 $ 18,630 $ 17,940 Expenses: Wages and salaries ($3,200 + $90.00q) 8,020 8,060 7,880 Fuel ($31.00q) 1,842 1,674 1,612 Airport fees ($820 + $31.00q) 2,354 2,494 2,432 Aircraft depreciation ($11.00q) 594 594 572 Office expenses ($250 + $1.00q) 472 304 302 Total expense 13,282 13,126 12,798 Net operating income $ 2,818 $ 5,504 $ 5,142 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.)

Answer 1

Solution:

Vulcan Flyovers
Flexible Budget Performance Report
For the month ended July 31
Particulars	Actual results	Revenue and spending variances	Flexible Budget	Activity Variances	Planning Budget
Flights	54			54			52
Revenue	$16,100.00	$2,530.00	U	$18,630.00	$690.00	F	$17,940.00
Expenses:
Wages and salaries	$8,020.00	$40.00	F	$8,060.00	$180.00	U	$7,880.00
Fuel	$1,842.00	$168.00	U	$1,674.00	$62.00	U	$1,612.00
Aitport Fees	$2,354.00	$140.00	F	$2,494.00	$62.00	U	$2,432.00
Aircraft Depreciation	$594.00	$0.00	None	$594.00	$22.00	U	$572.00
Office Expenses	$472.00	$168.00	U	$304.00	$2.00	U	$302.00
Total expense	$13,282.00	$156.00	U	$13,126.00	$328.00	U	$12,798.00
Net Operating Income	$2,818.00	$2,686.00	U	$5,504.00	$362.00	F	$5,142.00