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 ($355.00q)	$	16,400	$	19,170	$	18,460
Expenses:
Wages and salaries ($3,300 + $88.00q)		8,016		8,052		7,876
Fuel ($30.00q)		1,790		1,620		1,560
Airport fees ($830 + $33.00q)		2,492		2,612		2,546
Aircraft depreciation ($10.00q)		540		540		520
Office expenses ($200 + $1.00q)		422		254		252
Total expense		13,260		13,078		12,754
Net operating income	$	3,140	$	6,092	$	5,706

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

	Actual Results	Revenue and spending variances		Flexible Budget	Activity variances		Planning Budget
Flights	54			54			52
Revenue	16400	2770	U	19170	710	F	18460
Expenses:
Wages and salaries	8016	36	F	8052	176	U	7876
Fuel	1790	170	U	1620	60	U	1560
Airport fees	2492	120	F	2612	66	U	2546
Aircraft depreciation	540	0	None	540	20	U	520
Office expenses	422	168	U	254	2	U	252
Total expense	13260	182	U	13078	324	U	12754
Net operating income	3140	2952	U	6092	386	F	5706