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 87 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below:

For example, vessel operating costs should be $6,100 per month plus $478.00 per cruise plus $3.30 per passenger. The company’s sales should average $29.00 per passenger. The company’s planning budget for July is based on 56 cruises and 3,200 passengers

Complete the company’s planning budget for July. Revenue

Revenue:

Expenses:

Vessel Operating Costs

Advertising

Administrative Costs

Total Expense

Net Income

Fixed Cost
Per Month Cost per
Cruise Cost per
Passenger   Vessel operating costs $ 6,100    $ 478.00    $ 3.30        Advertising $ 2,900      Administrative costs $ 5,000    $ 40.00    $ 1.50        Insurance $ 3,700   

Explanation / Answer

Planning Budget

Revenue 3200*24 $92,800 Expenses: Vessel operaitng costs(6100+478*56+3.3*3200) $43,428 Advertising $ 2,900 Administrative cost(5000+40*56+1.5 *3200) $12,040 insurance $ 3,700 Total expense $62,068 Net income $30,732

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