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)		61		61		59
Revenue ($355.00q)	$	16,100	$	21,655	$	20,945
Expenses:
Wages and salaries ($3,400 + $85.00q)		8,555		8,585		8,415
Fuel ($30.00q)		2,000		1,830		1,770
Airport fees ($800 + $34.00q)		2,744		2,874		2,806
Aircraft depreciation ($9.00q)		549		549		531
Office expenses ($230 + $1.00q)		459		291		289
Total expense		14,307		14,129		13,811
Net operating income	$	1,793	$	7,526	$	7,134

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

			Flexible budget performance
			Actual	Revenue & spending		Flexible	Activity variance		planning
				variance		budget			budget
Flights			61			61			59
Revenue			16,100	5,555	U	21,655	710	F	20,945
expenses
Wages and salaries			8,555	30	F	8,585	170	U	8,415
Fuel			2,000	170	U	1,830	60	U	1,770
Airport fees			2,744	130	F	2,874	68	U	2,806
Aircraft depreciation			549	0	N	549	18	U	531
office expenses			459	168	U	291	2	U	289
total expense			14,307	178	U	14,129	318	U	13,811
net operating income			1,793	5,733	U	7,526	392	F	7,134