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) 59 59 57 Revenue ($355.00q) $ 16,100 $ 20,945 $ 20,235 Expenses: Wages and salaries ($3,100 + $90.00q) 8,370 8,410 8,230 Fuel ($31.00q) 1,997 1,829 1,767 Airport fees ($820 + $30.00q) 2,450 2,590 2,530 Aircraft depreciation ($10.00q) 590 590 570 Office expenses ($210 + $1.00q) 437 269 267 Total expense 13,844 13,688 13,364 Net operating income $ 2,256 $ 7,257 $ 6,871 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

Flexible budget performance report

	Actual	Revenue and spending variance	Flexible budget	Activity variance	Static budget
Flights	59		59		57
Revenue	16100	4845 U	20945	710 F	20235
Expenses
Wages and salaries	8370	40 F	8410	180 U	8230
Fuel	1997	168 U	1829	62 U	1767
Airport fees	2450	140 F	2590	60 U	2530
Aircraft Depreciation	590	0 None	590	20 U	570
Office expenses	437	168 U	269	2 U	267
Total expense	13844	156 U	13688	324 U	13364
Net operating income	2256	5001 U	7257	386 F	6871