Question

At Disney World in Orlando, Florida there is an outdoor camping facility called Fort Wilderness.
The Fort sits on a 10,000 wooded-acre site. Disney offers scenic tours around Fort Wilderness
using Disney characters. Data for the Fort Wilderness operation appear below:
Disney World Amusement Park, Inc.
Fort Wilderness Outdoor Facility
For the month ended August 31

Actual Flexible Planning
Results Budget Budget
Scenic Tours (q)…………………………….50……………………..55……………………45
Revenue ($100q)……………………....$15,000……………….$16,200……………....$14,500
Expenses:
Wages & Salaries ($2,000+$50q)….$7,000…………………$7,800………………..$6,000
Gasoline & Oil ($20q)……………….2,000…………………..2,200……………...…1,800
Theme Park Tickets ($300+$15q)…..1,800…………………..2,400…………………1,200
Guest Bus Depreciation ($10)………1,000…………………..1,400……..……….……800
Administrative Expenses ($200+$4q)....400…………………….400…………………..300
Total Expenses………………………….$12,200……………..…$14,200…………...…$10,100
Net Operating Income…………….……..$2,800…………………$2,000………...…...…$4,400
The company measures its activity in terms of scenic tours. Tickets for the scenic tours can be
purchased individually, or at a group discount for groups, clubs, etc.
Required:
1. Utilizing the format covered in Ch.9, prepare a flexible budget report for August that includes
revenue and spending variances and activity variances. (18 points)
2. Which of the variances should be of concern to management? Explain. (2 points)

Answer 1