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)		53		53		51
Revenue ($355.00q)	$	16,500	$	18,815	$	18,105
Expenses:
Wages and salaries ($3,200 + $87.00q)		7,777		7,811		7,637
Fuel ($31.00q)		1,811		1,643		1,581
Airport fees ($820 + $34.00q)		2,507		2,622		2,554
Aircraft depreciation ($11.00q)		583		583		561
Office expenses ($250 + $1.00q)		471		303		301
Total expense		13,149		12,962		12,634
Net operating income	$	3,351	$	5,853	$	5,471

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

Actual Results Flexible Budget Planning Budget

Flights 53 _________________ __________ 53 ______ _______ 51

Revenue $16,500 ________________ __________ $18,815 --------- _______ $18,105

Expenses:

Wages and salaries 7,777 __________________ ______________ 7,811 ______ ____   7,637

Fuel 1,811 __________________ ______________ 1,643 ______ _____ 1,581

Airport fees 2,507 __________________ ___________ 2,622 _______ _________ 2,554

Aircraft depreciation 583 ____________________ _____________ 583 _______ _____________ 561

Office expenses 471 ______________________ ____________ 303 ________ ____________ 301

Total expense 13,1491 _____________________ _______________ 2,9621 ________ _____________ 2,634

Net operating income $3,351 _________________ _____________    $5,853 ________ _________-- $5,471

Answer 1

FLEXIBLE BUDGET PERFORMANCE REPORT
	Planning Budget	Activity Variances		Flexible Budget	Revenue and Spending Variances		Actual Results
Flights [q]	51			53			53
Revenue [$355q]	$        18,105	$              710	F	$     18,815	$         2,315	U	$     16,500
Expenses:
Wages and salaries [$3200+$87q]	$           7,637	$              174	U	$       7,811	$               34	F	$        7,777
Fuel [$31q]	$           1,581	$                62	U	$       1,643	$            168	U	$        1,811
Airport fees [$820+$34q]	$           2,554	$                68	U	$       2,622	$            115	F	$        2,507
Aircraft depreciation [$11q]	$              561	$                22	U	$           583	$                -	N	$           583
Office expenses	$              301	$                   2	U	$           303	$            168	U	$           471
Total expenses	$        12,634	$              328	U	$     12,962	$            187	U	$     13,149
Net operating income	$           5,471	$              382	F	$       5,853	$         2,502	U	$        3,351