Exercise 9-4 Prepare a Flexible Budget Performance Report [LO9-4] Vulcan Flyover

Question

Exercise 9-4 Prepare a Flexible Budget Performance Report [LO9-4]

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 ($350.00q) $ 16,300 $ 20,650 $ 19,950 Expenses: Wages and salaries ($3,100 + $86.00q) 8,142 8,174 8,002 Fuel ($31.00q) 1,997 1,829 1,767 Airport fees ($810 + $30.00q) 2,465 2,580 2,520 Aircraft depreciation ($11.00q) 649 649 627 Office expenses ($240 + $1.00q) 467 299 297 Total expense 13,720 13,531 13,213 Net operating income $ 2,580 $ 7,119 $ 6,737

Explanation / Answer

Actual Revenue and spending variances Flexible Budget Activity variances Planning Budget Flights (q) 59 59 57 Revenue 16300 4350 U 20650 700 F 19950 Expenses: Wages and salaries 8142 32 F 8174 172 U 8002 Fuel 1997 168 U 1829 62 U 1767 Airport fees 2465 115 F 2580 60 U 2520 Aircraft depreciation 649 0 None 649 22 U 627 Office expenses 467 168 U 299 2 U 297 Total expense 13720 189 U 13531 318 U 13213 Net operating income 2580 4539 U 7119 382 F 6737

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