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)		61		61		59
Revenue ($355.00q)	$	16,200	$	21,655	$	20,945
Expenses:
Wages and salaries ($3,600 + $88.00q)		8,932		8,968		8,792
Fuel ($30.00q)		2,000		1,830		1,770
Airport fees ($870 + $32.00q)		2,697		2,822		2,758
Aircraft depreciation ($10.00q)		610		610		590
Office expenses ($220 + $1.00q)		449		281		279
Total expense		14,688		14,511		14,189
Net operating income	$	1,512	$	7,144	$	6,756

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 61 61 59 Revenue $16,200 $21,655 $20,945 Expenses: Wages and salaries 8,932 8,968 8,792 Fuel 2,000 1,830 1,770 Airport fees 2,697 2,822 2,758 Aircraft depreciation 610 610 590 Office expenses 449 281 279 Total expense 14,688 14,511 14,189 Net operating income $1,512 $7,144 $6,756

Answer 1

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Vulcan Flyovers
For the Month Ended July 31
Flexible Budget Performance Report	Actual Results	Flexible Budget	Revenue Variance	Spending Variance	Remarks	Planning Budget	Activity Variance	Remarks
Flights	61.00	61.00				59.00
Revenue	16,200.00	21,655.00	5,455.00		Unfavorable	20,945.00	4,745.00	Unfavorable
Expenses:
Wages and salaries	8,932.00	8,968.00		36.00	Favorable	8,792.00	140.00	Unfavorable
Fuel	2,000.00	1,830.00		170.00	Unfavorable	1,770.00	230.00	Unfavorable
Airport fees	2,697.00	2,822.00		125.00	Favorable	2,758.00	61.00	Favorable
Aircraft depreciation	610.00	610.00		-	NA	590.00	20.00	Unfavorable
Office expenses	449.00	281.00		168.00	Unfavorable	279.00	170.00	Unfavorable
Total expense	14,688.00	14,511.00		177.00	Unfavorable	14,189.00	499.00	Unfavorable
Net operating income	1,512.00	7,144.00		5,632.00	Unfavorable	6,756.00	5,244.00	Unfavorable