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Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively...

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) 58 58 56
Revenue ($345.00q) $ 16,200 $ 20,010 $ 19,320
Expenses:
Wages and salaries ($3,500 + $91.00q) 8,736 8,778 8,596
Fuel ($33.00q) 2,078 1,914 1,848
Airport fees ($800 + $33.00q) 2,599 2,714 2,648
Aircraft depreciation ($11.00q) 638 638 616
Office expenses ($210 + $1.00q) 436 268 266
Total expense 14,487 14,312 13,974
Net operating income $ 1,713 $ 5,698 $ 5,346

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.)

Solutions

Expert Solution

  • All working forms part of the answer

Actual

Revenue & Spending Variance

Flexible

Activity variances

Planning

Results

Budget

Budget

Flights (q)

58

58

56

Revenue ($345.00q)

$           16,200.00

$            3,810.00

Unfavourable

$          20,010.00

$               690.00

Favourable

$        19,320.00

Expenses:

Wages and salaries ($3,500 + $91.00q)

$             8,736.00

$                  42.00

Favourable

$             8,778.00

$               182.00

Unfavourable

$           8,596.00

Fuel ($33.00q)

$             2,078.00

$                164.00

Unfavourable

$             1,914.00

$                  66.00

Unfavourable

$           1,848.00

Airport fees ($800 + $33.00q)

$             2,599.00

$                115.00

Favourable

$             2,714.00

$                  66.00

Unfavourable

$           2,648.00

Aircraft depreciation ($11.00q)

$                 638.00

$                         -  

None

$                638.00

$                  22.00

Unfavourable

$              616.00

Office expenses ($210 + $1.00q)

$                 436.00

$                168.00

Unfavourable

$                268.00

$                    2.00

Unfavourable

$              266.00

Total expense

$           14,487.00

$                175.00

Unfavourable

$          14,312.00

$               338.00

Unfavourable

$        13,974.00

Net operating income

$             1,713.00

$            3,985.00

Unfavourable

$             5,698.00

$               352.00

Favourable

$           5,346.00


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