Tervo Jeep operates jeep tours and it bases its budgets on two measures of activ

Question

Tervo Jeep operates jeep tours and it bases its budgets on two measures of activity (i.e. cost drivers), namely guest and jeeps. One vehicule used in one tour on one day counts as jeep. Each jeep has one tour guide. The company uses the following data in its budgeting:

Fixed per month Variable per guest Variable per jeep

Revenue 0 $101 0

Tour guide wages 0 0 136

Vehicule expenses $4,900 8 57

Administrative expenses 1,000 2 0

In March the company budgeted for 492 guests and 165 jeeps.

The company's income statement showing the actual results:

Actual guests 497

Actual jeeps 163

Revenue $49,067

Expenses

Tour guide wages 21,858

Vehicle expenses 17,917

Administrative expenses 2,014

Total expense $41,789

Net operating income $7,278

Requirement: Prepare a ( FLEXIBLE BUDGET PERFORMANCE REPORT PART I and PART II ) showing both the company's activity variances and revenue and spending variances for March.

Label each variance as favorable (F) or unfavorable (U).

Please, I need both Budgets. Thanks

Explanation / Answer

Particulars Budgeted   Actuals Variance $ $ $ Actual Guests                    492                 497                   5 F Actual Jeeps                    165                 163                  (2) U Revenue                50,197            49,067            (1,130) U Expenses Tour guide wages                22,168            21,858               (310) U Vehicle Expenses                14,191            17,917             3,726 F Administrative expenses                 1,994              2,014                 20 F Total Expenses                38,353            41,789             3,436 F Net Operating Income                11,844              7,278            (4,566) U

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