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 Per Month Cost per Cruise Cost per Passenger Vessel operating costs $ 6,000 $ 479.00 $ 3.40 Advertising $ 2,900 Administrative costs $ 5,800 $ 31.00 $ 1.50 Insurance $ 3,500 For example, vessel operating costs should be $6,000 per month plus $479.00 per cruise plus $3.40 per passenger. The company’s sales should average $34.00 per passenger. The company’s planning budget for July is based on 55 cruises and 3,000 passengers. Required: Complete the company’s planning budget for July.

Explanation / Answer

Alyeski Tours Planning Budget For the Month Ended July 31 Revenue 3000*34 1,02,000 Expenses: Vessel operating costs 6000+479*55+3000*3.40 42,545 Advertising 2,900 Administrative costs 5800+31*55+3000*1.50 12,005 Insurance 3,500 Total expense 60,950 Net operating income 41,050

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.