Question

EXERCISE 9-4 Prepare a Flexible Budget Performance Report
Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company'soperations in July appear below:

Vulcan Flyovers
Operating Data
For the Month Ended July 31

Planning Flexible Actual Results
Budget Budget

Flights 50 48 48
Revenue 16,000 15,360 13,650

Expenses:
Wages/Salaries 8100 7,936 8430
Fuel (23.00q) 1,150 1,104 1,260
Airport Fees (650 + 38.oo q)2,550 2,474 2,350
Aircraft Depreciation(7.00q) 350 336 336
Office expenses (1.90 + 2.00q) 290 286 460
Total expenses 12,440 12,136 12,836
Net Operating Income 3,560 3,224 814

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 adiscount.
Required:
1. Prepare a flexible budget performance report for July.
2. Which of the variances should be of concern to management? Explain.

Answer 1