Question

Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 84 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below: Fixed Cost per Month Cost per Cruise Cost per Passenger Vessel operating costs $ 6,400 $ 476.00 $ 3.40 Advertising $ 2,800 Administrative costs $ 5,200 $ 39.00 $ 1.50 Insurance $ 3,500 For example, vessel operating costs should be $6,400 per month plus $476.00 per cruise plus $3.40 per passenger. The company’s sales should average $34.00 per passenger. In July, the company provided 60 cruises for a total of 3,150 passengers. Required: Prepare the company’s flexible budget for July.

Answer 1

Answer-

AYYESKI TOURS OPERATORS
FLEXIBLE BUDGET
FOR THE MONTH ENDED JULY 31
PARTICULARS		AMOUNT
		$
Revenue	$34 per passenger*3150 passengers	107100
Less- Expenses:-
Vessel operating costs	$6400+($476 per cruise*60 cruises)+($3.40 per passenger*3150 passengers	45670
Advertising		2800
Administrative costs	$5200+($39 per cruise*60 cruises)+($1.50 per passenger*3150 passengers	12265
Insurance		3500
Total Expenses		64235
Income from operations		42865