Velazques Jeep Tours operates jeep tours in the heart of the Colorado Rockies. T

Question

Velazques Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company uses the following data in its budgeting:

Required:

Prepare a report showing the company's activity variances for March. Label each variance as favorable (F) or unfavorable (U). (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Fixed element
per month Variable element
per guest Variable element
per jeep   Revenue $ 0 $ 95 $ 0   Tour guide wages $ 0 $ 0 $ 105   Vehicle expenses $ 4,600 $ 7 $ 52   Administrative expenses $ 1,600 $ 1 $ 0

Explanation / Answer

Solution.

Velazques Jeep Tours Income Statement For the Month Ended March 31 Actual Budgeted F / UF   Actual guests 354             366 U   Actual jeeps 138             136 F   Revenue $ 33,570       34,770 U Expenses:   Tour guide wages 14,240       14,280 F   Vehicle expenses 14,374       12,624 U   Administrative expenses 1,954          1,966 F   Total expense 30,568       28,870 U   Net operating income $ 3,002          5,900 F

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