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) 52 52 50 Revenue ($355.00q) $ 16,400 $ 18,460 $ 17,750 Expenses: Wages and salaries ($3,800 + $92.00q) 8,540 8,584 8,400 Fuel ($31.00q) 1,780 1,612 1,550 Airport fees ($870 + $32.00q) 2,409 2,534 2,470 Aircraft depreciation ($11.00q) 572 572 550 Office expenses ($210 + $1.00q) 430 262 260 Total expense 13,731 13,564 13,230 Net operating income $ 2,669 $ 4,896 $ 4,520 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.)

Answer 1

	Actual results	Revenue and spending variances		Flexible budget	Activity variances		Planning budget
Flights	52			52			50
Revenue	16400	2060	U	18460	710	F	17750
Expenses:
Wages and salaries	8540	44	F	8584	184	U	8400
Fuel	1780	168	U	1612	62	U	1550
Airpost fees	2409	125	F	2534	64	U	2470
Aircraft depreciation	572	0	None	572	22	U	550
Office expenses	430	168	U	262	2	U	260
Total expense	13731	167	U	13564	334	U	13230
Net operating income	2669	2227	U	4896	376	F	4520