Question

Exercise 9-4 Prepare a Flexible Budget Performance Report [LO9-4]

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)		55		55		53
Revenue ($355.00q)	$	16,300	$	19,525	$	18,815
Expenses:
Wages and salaries ($3,200 + $86.00q)		7,898		7,930		7,758
Fuel ($31.00q)		1,873		1,705		1,643
Airport fees ($860 + $34.00q)		2,585		2,730		2,662
Aircraft depreciation ($9.00q)		495		495		477
Office expenses ($200 + $1.00q)		423		255		253
Total expense		13,274		13,115		12,793
Net operating income	$	3,026	$	6,410	$	6,022

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