Question

Cryan Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company uses the following data in its budgeting:

	Fixed element per month			Variable element per guest			Variable element per jeep
Revenue	$	0		$	217		$	0
Tour guide wages	$	0		$	0		$	161
Vehicle expenses	$	5,600		$	15		$	70
Administrative expenses	$	2,100		$	14		$	0

In May, the company budgeted for 497 guests and 202 jeeps. The company's income statement showing the actual results for the month appears below:

Cryan Jeep Tours
Income Statement
For the Month Ended May 31
Actual guests		512
Actual jeeps		197
Revenue	$	87,854
Expenses:
Tour guide wages		33,157
Vehicle expenses		20,640
Administrative expenses		7,888
Total expense		61,685
Net operating income	$	26,169

Answer 1

Answer:

Cryan Jeep Tours
Revenue and Spending Variance
For the month ended May
		Actual results	Flexible Budget	Revenue and Spending Variance
Actual guests	(X)	512	512
Actual jeep	(Y)	197	197
Revenue	($217* X)	$     87854	$ 111104	$23250	U
Expenses
Tour guide wages	($161* Y)	$     33157	$     31717	$   1440	U
Vehicle expenses	[$5600+ ($15* X) + ($70* Y)]	$     20640	$     27070	$   6430	F
Administrative expenses	[$2100+ ($14* X)]	$       7888	$     9268	$   1380	F
Total expenses		$     61685	$     68055	$   6370	F
Net operating Income		$     26169	$     43049	$16880	U