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)		48		48		50
Revenue ($320.00q)	$	13,650	$	15,360	$	16,000
Expenses:
Wages and salaries ($4,000 + $82.00q)		8,430		7,936		8,100
Fuel ($23.00q)		1,260		1,104		1,150
Airport fees ($650 + $38.00q)		2,350		2,474		2,550
Aircraft depreciation ($7.00q)		336		336		350
Office expenses ($190 + $2.00q)		460		286		290
Total expense		12,836		12,136		12,440
Net operating income	$	814	$	3,224	$	3,560

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

Vulcan Flyovers
Flexible Budget Report
For the month ended July 31
	Actual results	Revenue and Spending Variances		Flexible Budget	Activity Variance		Planning Budget
Flights	48			48			50
Revenue	$ 13,650	$    1,710	U	$ 15,360	$        640	U	$ 16,000
Expenses:
Wages and salaries	$    8,430	$        494	U	$    7,936	$        164	F	$    8,100
Fuel	$    1,260	$        156	U	$    1,104	$          46	F	$    1,150
Airport fees	$    2,350	$        124	F	$    2,474	$          76	F	$    2,550
Aircraft depreciation	$        336	$           -	None	$        336	$          14	F	$        350
Office expenses	$        460	$        174	U	$        286	$             4	F	$        290
Total expense	$ 12,836	$        700	U	$ 12,136	$        304	F	$ 12,440
Net operating income	$        814	$    2,410	U	$    3,224	$        336	U	$    3,560

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