Question

Exercise 9-4 (Algo) Prepare a Flexible Budget Performance Report [LO9-4) 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 Flexible Planning Results Budget Budget 60 60 58 Flights (9) $ 16,100 $ 20,700 $20,010 9,160 9,200 9,020 Revenue ($345.00) Expenses! Wages and salaries ($3,800 + $90.00g) Fuel ($31.00) Airport fees (8870 + $34.009) Aircraft depreciation ($11.009) office expenses ($250 + $1.009) Total expense 2,765 2,910 2,842 478 310 308 15.09114,940 14,606 $ 1,009 $ 5,760 $5,404 Net operating income 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 (.e., zero variance). Input all amounts as positive values.) Vulcan Flyovers Flexible Budget Performance Report For the Month Ended July 31 Revenue and Spending Flexible Variances Budget L 601 601 Actual Results Activity Variances Planning Budget Flights Revenue $ 16,1001 1 $ 20,700 $ 20,010 Expenses: 9,020 9.2001 1,8601 2,9101 1.798 9,1601 2,028 2.765 660 478 Wages and salaries Fuel Airport fees Aircraft depreciation Office expenses Total expense Net operating income 2.842 660 308 15.091 14.940 14.606 $ 5,760 5,404

Answer 1

Ans.	VULCAN FLYOVERS
	Flexible Budget Performance Report
	For the Month Ended JULY 31
		Actual Results	Spending variance		Flexible Budget	Activity variance		Planning Budget
	Flights	60			60			58
	Revenue	$16,100	$4,600	U	$20,700	$690	F	$20,010
	Expenses:
	Wages and salaries	$9,160	$40	F	$9,200	$180	U	$9,020
	Fuel	$2,028	$168	U	$1,860	$62	U	$1,798
	Airport fees	$2,765	$145	F	$2,910	$68	U	$2,842
	Aircraft depreciation	$660	$0	none	$660	$22	U	$638
	Office expenses	$478	$168	U	$310	$2	U	$308
	Total expenses	$15,091	$151	U	$14,940	$334	U	$14,606
	Net operating income	$1,009	$4,751	U	$5,760	$356	F	$5,404
	*Flexible budget is prepared on the basis of actual units.
	*Fixed costs remain constant on each level of sales.
	Revenue & Spending variance   =   Actual results - Flexible budget
	Activity variance =   Flexible budget - Planning budget
	*Increase in revenue or net operating income and decrease in expenses from Planning budget to Flexible budget and flexible budget to actual results =   Favorable.
	*Decrease in revenue or net operating income and increase in expenses from Planning budget to flexible budget and flexible budget to actual results =   Unfavorable.