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 Budget		Planning Budget
Flights (q)		60		60		58
Revenue ($355.00q)	$	16,100	$	21,300	$	20,590
Expenses:
Wages and salaries ($3,600 + $90.00q)		8,960		9,000		8,820
Fuel ($31.00q)		2,028		1,860		1,798
Airport fees ($870 + $34.00q)		2,810		2,910		2,842
Aircraft depreciation ($10.00q)		600		600		580
Office expenses ($210 + $1.00q)		438		270		268
Total expense		14,836		14,640		14,308
Net operating income	$	1,264	$	6,660	$	6,282

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.

Answer 1

Answer

--Requirement 1

Operating Data
For the Month Ended July 31
		Actual results	Revenue & Spending Variance		Flexible Budget	Revenue & Spending Variance		Planning Budget
Flights (q)		60			60			58
Revenue ($355.00q)		$    16,100.00	$       5,200.00	U	$ 21,300.00	$ 710.00	F	$      20,590.00
Expenses:
Wages and salaries ($3,600 + $90.00q)		$       8,960.00	$             40.00	F	$     9,000.00	$ 180.00	U	$         8,820.00
Fuel ($31.00q)		$       2,028.00	$           168.00	U	$     1,860.00	$    62.00	U	$         1,798.00
Airport fees ($870 + $34.00q)		$       2,810.00	$           100.00	F	$     2,910.00	$    68.00	U	$         2,842.00
Aircraft depreciation ($10.00q)		$          600.00	$                    -	N	$        600.00	$    20.00	U	$            580.00
Office expenses ($210 + $1.00q)		$          438.00	$           168.00	U	$        270.00	$       2.00	U	$            268.00
Total expense		$    14,836.00	$           196.00	U	$ 14,640.00	$ 332.00	U	$      14,308.00
Net operating income		$       1,264.00	$       5,396.00	U	$     6,660.00	$ 378.00	F	$         6,282.00