Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Wa

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:

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.)

Vulcan Flyovers Operating Data For the Month Ended July 31 Actual
Results Flexible
Budget Planning
Budget Flights (q) 59 59 57 Revenue ($345.00q) $ 16,100 $ 20,355 $ 19,665 Expenses: Wages and salaries ($3,600 + $91.00q) 8,927 8,969 8,787 Fuel ($33.00q) 2,111 1,947 1,881 Airport fees ($880 + $32.00q) 2,658 2,768 2,704 Aircraft depreciation ($11.00q) 649 649 627 Office expenses ($230 + $1.00q) 457 289 287 Total expense 14,802 14,622 14,286 Net operating income $ 1,298 $ 5,733 $ 5,379

Explanation / Answer

Vulcan Flyovers

Flexible Budget Performance Report

For The Month Ended July 31

Planning Budget Activity Variances Flexible Budget Revenue and Spending Variances Actual Results Flights (q) 57 59 59 (a) Revenue ($345.00q) 19665 690 (F) 20355 4255 (U) 16100 (b) Expenses: (1) Wages and salaries ($3,600 + $91.00q) 8787 182 (U) 8969 42 (F) 8927 (2) Fuel ($33.00q) 1881 66 (U) 1947 164 (U) 2111 (3) Airport fees ($880 + $32.00q) 2704 64 (U) 2768 110 (F) 2658 (4) Aircraft depreciation ($11.00q) 627 22 (U) 649 None 649 (5) Office expenses ($230 + $1.00q) 287 2 (U) 289 168 (U) 457 (b) Total expense 14286 336 (U) 14622 180 (U) 14802 Net operating income 5379 354 (F) 5733 4434 (U) 1298

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