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 ($345.00q)	$	16,100	$	18,630	$	17,940
Expenses:
Wages and salaries ($3,500 + $88.00q)		8,216		8,252		8,076
Fuel ($32.00q)		1,894		1,728		1,664
Airport fees ($850 + $32.00q)		2,463		2,578		2,514
Aircraft depreciation ($10.00q)		540		540		520
Office expenses ($250 + $1.00q)		472		304		302
Total expense		13,585		13,402		13,076
Net operating income	$	2,515	$	5,228	$	4,864

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.)

Vulcan Flyovers Flexible Budget Performance Report For the Month Ended July 31 Actual Results Flexible Budget Planning Budget Flights 54 54 52 Revenue $16,100 $18,630 $17,940 Expenses: Wages and salaries 8,216 8,252 8,076 Fuel 1,894 1,728 1,664 Airport fees 2,463 2,578 2,514 Aircraft depreciation 540 540 520 Office expenses 472 304 302 Total expense 13,585 13,402 13,076 Net operating income $2,515    $5,228    $4,864

Answer 1

Solution: