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 Planning Budget Budget 62 68 Flights (9) $ 16,100 $ 21,399 $ 20,709 Revenue ($345.999) Expenses: Wages and salaries ($3,588 + $89.08) Fuel ($32.899) Airport fees ($860 + $32.899) Aircraft depreciation ($8.089) Office expenses ($220 + $1.889) Total expense 8,982 2,150 2,729 496 45A 14,895 1,295 9,018 1,984 2,844 496 282 14,624 6,766 8,840 1,920 2,789 480 289 14,300 6,480 $ $ $ 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 varlances. (Indicate the effect of each varlance 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 Flexible Budget 62 Actual Results Planning Budget Flights 62 Revenue $ 16,1001 21,390 20,700 Expenses: 9,018 8,840 Wages and salaries Fuel 8,980 2.150 2.729 1.984 1.920 2,844 496 496 Airport fees Aircraft depreciation Office expenses Total expense Net operating income 282 450 14,805 1,295 2.780 480 280 14,300 6,400 14,624 6,766 $ $

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	62			62			60
	Revenue	$16,100	$5,290	U	$21,390	$690	F	$20,700
	Expenses:
	Wages and salaries	$8,980	$38	F	$9,018	$178	U	$8,840
	Fuel	$2,150	$166	U	$1,984	$64	U	$1,920
	Airport fees	$2,729	$115	F	$2,844	$64	U	$2,780
	Aircraft depreciation	$496	$0	none	$496	$16	U	$480
	Office expenses	$450	$168	U	$282	$2	U	$280
	Total expenses	$14,805	$181	U	$14,624	$324	U	$14,300
	Net operating income	$1,295	$5,471	U	$6,766	$366	F	$6,400
	*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.