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) 56 56 54

Revenue ($355.00q) $ 16,300 $ 19,880 $ 19,170

Expenses:

Wages and salaries ($3,300 + $91.00q) 8,354 8,396 8,214

Fuel ($32.00q) 1,958 1,792 1,728

Airport fees ($820 + $30.00q) 2,380 2,500 2,440

Aircraft depreciation ($9.00q) 504 504 486

Office expenses ($210 + $1.00q) 434 266 264

Total expense 13,630 13,458 13,132

Net operating income $ 2,670 $ 6,422 $ 6,038

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

Solution: