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

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 86 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below: Fixed Cost Cost per Cost per Cruise Passenger 472.00 $3.40 Vessel operating costs Advertising Administrative costs per Month $6,700 $2,300 S5,800 $3,600 S 36.00 1.50 For example, vessel operating costs should be $6,700 per month plus $472.00 per cruise plus $3.40 per passenger. The company's sales should average $30.00 per passenger. The company's planning budget for July is based on 54 cruises and 3,050 passengers. Required Complete the company's planning budget for July. Alyeski Tours Planning Budget For the Month Ended July 31 Revenue Expenses Vessel operating costs Advertising Administrative costs Insurance Total expense Net operating income 0

Explanation / Answer

Alyeski tours planning budget for the month ended July 31 Revenue (3,050*30) 91500 Expenses Vessel operating costs (6,700+472*54+3.40*3050) 42558 Advertising 2,300 Administrative costs (5,800+36*54+1.50*3050) 12319 insurance 3,600 total expense 60777 Net operating income 30723

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