#5 Icicle Bay Tours operates day tours of coastal glaciers in Alaska on its tour

Question

#5

Icicle Bay Tours operates day tours of coastal glaciers in Alaska on its tour boat the Emerald 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 89 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below: For example, vessel operating costs should be $6,700 per month plus $472.00 per cruise plus $3.20 per passenger. The company's sales should average $29.00 per passenger. The company's planning budget for August is based on 52 cruises and 3,150 passengers. Complete the company's planning budget for August.

Explanation / Answer

Answer:

ICICLE BAY TOURS Planning Budget For the month ended August 31 Calulations In$ Revenue 91350 (3,150 passangers*$29 per passanger) Expenses: Vessel Operating costs 41324 ($6700+52*472+3150*$3.2) Advertising 2600 Administrative costs 12289 ($5900+52*32+3150*$1.5) Insurance 3200 Total Expenses 59413 Net Operating Income 31937

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