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)		55		55		53
Revenue ($350.00q)	$	16,200	$	19,250	$	18,550
Expenses:
Wages and salaries ($3,400 + $91.00q)		8,363		8,405		8,223
Fuel ($31.00q)		1,873		1,705		1,643
Airport fees ($870 + $34.00q)		2,625		2,740		2,672
Aircraft depreciation ($11.00q)		605		605		583
Office expenses ($210 + $1.00q)		433		265		263
Total expense		13,899		13,720		13,384
Net operating income	$	2,301	$	5,530	$	5,166

  

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. Complete the flexible budget performance report abstract for July. (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
	Activity Variance		Revenue and Spending Variances
Flights
Revenue	$        700	F	$    3,050	U
Expenses:
Wages and salaries	$        182	U	$          42	F
Fuel	$          62	U	$        168	U
Airport fees	$          68	U	$        115	F
Aircraft depreciation	$          22	U	$           -	None
Office expenses	$             2	U	$        168	U
Total expense	$        336	U	$        179	U
Net operating income	$        364	F	$    3,229	U
Workings:
Vulcan Flyovers
Flexible Budget Report
For the month ended July 31
	Actual results	Revenue and Spending Variances		Flexible Budget	Activity Variance		Planning Budget
Flights	55			55			53
Revenue	$ 16,200	$    3,050	U	$ 19,250	$        700	F	$ 18,550
Expenses:
Wages and salaries	$    8,363	$          42	F	$    8,405	$        182	U	$    8,223
Fuel	$    1,873	$        168	U	$    1,705	$          62	U	$    1,643
Airport fees	$    2,625	$        115	F	$    2,740	$          68	U	$    2,672
Aircraft depreciation	$        605	$           -	None	$        605	$          22	U	$        583
Office expenses	$        433	$        168	U	$        265	$             2	U	$        263
Total expense	$ 13,899	$        179	U	$ 13,720	$        336	U	$ 13,384
Net operating income	$    2,301	$    3,229	U	$    5,530	$        364	F	$    5,166