Question

	Fixed Cost per Month			Cost per Cruise			Cost per Passenger
Vessel operating costs	$	6,300		$	472.00		$	3.20
Advertising	$	2,100
Administrative costs	$	5,000		$	31.00		$	1.50
Insurance	$	3,800

For example, vessel operating costs should be $6,300 per month plus $472.00 per cruise plus $3.20 per passenger. The company’s sales should average $35.00 per passenger. In July, the company provided 53 cruises for a total of 3,050 passengers.

Required:

Prepare the company’s flexible budget for July.

Actual cruises

budgeted cruises

revenue

expenses

vessel operating cost

advertising

administrative cost

insurance

total expenses

net operating income

Answer 1

Please see the budget below :  

Budget
For the Month Ended July 31
Budgeted cruises (a1)	53
Budgeted passengers (a2)	3,050
Revenue ($35.00*a2)	106,750
Expenses:
Vessel operating costs ($6,300 + $472.00*a1 +$3.20*a2)	41,076
Advertising ($2,100)	2,100
Administrative costs ($5,000 + $31.00*a1 +$1.50*a2)	11,218
Insurance ($3,800)	3,800
Total expense	58,194
Net operating income	48,556