Question

Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 81 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below:

    

	Fixed Cost per Month		Cost per Cruise		Cost per Passenger
Vessel operating costs	$	6,400	$	477.00	$	3.10
Advertising	$	2,400
Administrative costs	$	5,900	$	34.00	$	1.50
Insurance	$	3,200

  

For example, vessel operating costs should be $6,400 per month plus $477.00 per cruise plus $3.10 per passenger. The company’s sales should average $31.00 per passenger. The company’s planning budget for July is based on 52 cruises and 3,150 passengers.

  

Required:

Complete the company’s planning budget for July

Revenue

Expenses:

Vessel Operating Costs

Advertising Costs

Administrative Costs

Insurance

Total Expense:

Net Operating Income

Answer 1

Planning Budget for the month of July                                                                  (In Dollar)

Particulars	Fix Cost per month	Cruise Cost	Passenger Cost	Total
A. Revenue (3150*$31)				97650
Expenses:
Vessel Operating Cost	6400	24804 ($477*52)	9765 ($3.1*3150)	40969
Advertising Cost	2400	-	-	2400
Administrative Cost	5900	1768 ($34*52)	4725 ($1.5*3150)	12393
Insurance	3200	-	-	3200
B. Total Expense	17900	26572	14490	58962
Net Operating Income (A-B)	38688