Question

Alveski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers-the number of cruises and the number of passengers-that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 80 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below: Cost per Cruise $ 480.00 Cost per Passenger $ 2.00 Vessel operating costs Advertising Administrative costs Insurance Fixed Cost per Month $ 5,200 $ 1,700 $ 4,300 $ 2,900 $ 24.00 $ 1.00 For example, vessel operating costs should be $5,200 per month plus $480 per cruise plus $2 per passenger. The company's sales should average $25 per passenger. In July, the company provided 24 cruises for a total of 1,400 passengers. Required: Prepare the company's flexible budget for July. Alyeski Tours Flexible Budget For the Month Ended July 31 Revenue Expenses: Vessel operating costs Advertising Administrative costs Insurance Total expense Net operating income

Answer 1

Particulars Fixed cost (A) Vessel operating costs $ 5,200 Advertising $ 1,700 Administrative costs $ 4,300 Insurance $ 2,900 Cruises (B) 2 4 Per unit (C) $ 480.00 $ - $ 24.00 $ . Total curises Passengers Per unit D = (B*C) (E) (F) $ 11,520 1400 $ 2.00 $ 1400 $ - $ 576 1400 $ 1.00 1400 Total curises G = (E * F) $ 2,800 $ - $ 1,400 Total A+D+G $19,520 $ 1,700 $ 6,276 $ 2,900 24 24 24 $

Alyeski Tours Flexable Budget For the month of July Particulars Actual cruises Actual passengers Amount 24 1400 Revenue $ 35,000 Expenses Vessel operating costs | $ 19,520 Advertising $ 1,700 Administrative costs $ 6,276 Insurance $ 2,900 Total expenses $ 30,396 Net operating income $ 4,604