Question

Alyeski 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 86 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below: Cost per Cruise $ 478.00 Cost per Passenger $ 3.10 Vessel operating costs Advertising Administrative costs Insurance Fixed Cost per Month $6.000 $2,200 $5.900 $3,200 $ 38.00 $ 1.50 For example, vessel operating costs should be $6,000 per month plus $476.00 per cruise plus $3.10 per passenger. The company's sales should average $29.00 per passenger. The company's planning budget for July is based on 59 cruises and 3,000 passengers. Required: Complete the company's planning budget for July. Alyeski Tours Planning Budget For the Month Ended July 31 Revenue Expenses: Vessel operating costs Advertising Administrative costs Insurance Total expense Net operating income

Answer 1

Solution:

Alyeski Tours
Planning budget
For the month ended July 31
Cruises	59
Passengers	3000
Revenue (3000*$29.00)	$87,000
Expenses:
Vessel operating Costs ($6000+59*$476+ 3000*$3.10)	$43,384
Advertising	$2,200
Administrative costs ($5900+59*$38 +3000*$1.50)	$12,642
Insurance	$3,200
Total Expenses	$61,426
Net Operating Income	$25,574