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)		57		57		55
Revenue ($345.00q)	$	16,000	$	19,665	$	18,975
Expenses:
Wages and salaries ($3,800 + $85.00q)		8,615		8,645		8,475
Fuel ($31.00q)		1,935		1,767		1,705
Airport fees ($880 + $34.00q)		2,678		2,818		2,750
Aircraft depreciation ($10.00q)		570		570		550
Office expenses ($230 + $1.00q)		455		287		285
Total expense		14,253		14,087		13,765
Net operating income	$	1,747	$	5,578	$	5,210

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 (i.e., zero variance). Input all amounts as positive values.)

Vulcan Flyovers Flexible Budget Performance Report For the Month Ended July 31 Flexible Budget 57 Actual Results Planning Budget 55 Flights 57 Revenue 16,000 | $ 19,665 $ 18,975 Expenses: Wages and salaries 8,615 1,935 8,645 1,767 Fuel 8,475 1,705 2,750 Airport fees 2,678 2,818 570 550 455 285 Aircraft depreciation Office expenses Total expense Net operating income 570 287 14,087 5,578 13,765 14,253 1,747 5,210

Answer 1

Vulcan Flyovers
Flexible Budget Performance Report
For the month ended July 31
	Actual Results	Revenue/Spending		Flexible	Activity		Planning
		Variance		Budget	Variance		Budget
	($)	($)		($)			($)
Flights (q)	57.00			55.00			55.00
Revenue	16,000.00	3,665.00	U	19,665.00	690.00	F	18,975.00
Expenses:
Wages and Salaries	8,615.00	30.00	F	8,645.00	170.00	U	8,475.00
Fuel	1,935.00	168.00	U	1,767.00	62.00	U	1,705.00
Airport Fess	2,678.00	140.00	F	2,818.00	68.00	U	2,750.00
Aircraft Depreciation	570.00	-	-	570.00	20.00	U	550.00
Office Expenses	455.00	168.00	U	287.00	2.00	U	285.00
Total Expense	14,253.00	166.00	U	14,087.00	322.00	U	13,765.00
Net Operating Income	1,747.00	3,831.00	U	5,578.00	368.00	F	5,210.00
(Revenue - Expenses)
Explanation
Revenue/Spending Variance = Actual Result - Flexible Budget Amount
Activity Variances = Flexible Budget Amounts - Planning Budget Amounts