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)	$	16,500	$	20,945	$	20,235
Expenses:
Wages and salaries ($3,200 + $87.00q)		8,299		8,333		8,159
Fuel ($32.00q)		2,054		1,888		1,824
Airport fees ($850 + $32.00q)		2,623		2,738		2,674
Aircraft depreciation ($11.00q)		649		649		627
Office expenses ($240 + $1.00q)		467		299		297
Total expense		14,092		13,907		13,581
Net operating income	$	2,408	$	7,038	$	6,654

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