Alyeski Tours operates day tours of coastal glaciers in Alaska on ts tour boat t

Question

Alyeski Tours operates day tours of coastal glaciers in Alaska on ts 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 80 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below: Fixed Cost Cost per Cost per per Month Cruise Passenger Vessel operating costs 5,200 $480.00 S 2.00 S 1,700 Administrative costs Insurance 24.00 S 1.00 4,300 2,900 For example, vessel operating costs should be $5,200 per month plus $480 per cruise plus $2 per passenger. The company's sales should average $25 per passenger. The company's planning budget for July is based on 24 cruises and 1,400 passengers Required Complete the company's planning budget for July Planning Budget For the Month Ended July 31 Revenue Vessel operating costs Administrative costs Total expense Net operating income

Explanation / Answer

Plannin budget Revenue (1400*25) 35,000 Expenses: Vessel operating costs (5200+24*480+1400*2) 19520 Advertising 1,700 Administrative costs (4300+24*24+1400*1) 6276 insurance 2,900 total expense 30396 net operating income 4,604

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