Fun Jeep Tours operates jeep tours in the heart of the Tennessee Smokey Mountain
ID: 2512415 • Letter: F
Question
Fun Jeep Tours operates jeep tours in the heart of the Tennessee Smokey Mountains. 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: Fixed element per month Variable clement pcr jccp $0 $130 $50 $0 Variable element per guest $0 S0 $3,600 $2,100 Revenue $132 $0 $9 $1 Administrative expenses In July, the company budgeted for 430 guests and 210 jeeps. The actual activity for the month was 415 guests and 205 jeeps Required: Prepare a report showing the company's activity variances for July. Label each variance as favorable (F) or unfavorable (U). Use Exhibit 9-6 on page 419 as an exampleExplanation / Answer
Budgeted Guests 430 Jeeps 210 Actuals Guests 415 Jeeps 205 Actuals Standard Variance Revenue NOTE 1 $54,780.00 $56,760.00 $1,980.00 A Tour Guide Wages NOTE 2 $26,650.00 $27,300.00 $650.00 F Vehicle Expenses NOTE 3 $17,585.00 $17,970.00 $385.00 F Administrative Expenses NOTE 4 $2,515.00 $2,530.00 $15.00 F $8,030.00 $8,960.00 $930.00 A NOTE 1 The Revenue from Guests were expected to be for 430 guests, however 415 guests were in actual So, Loss of Revenue from 15 guests at rate of $132 amounting to $ 1980 NOTE 2 The Tour Guide Wages for Guests were expected to be for 210 Jeeps, however 205 jeeps were in actual So, Gain to extent of 5 Jeeps amounting to $650 NOTE 3 The Vehicle Expenses for Guests were expected to be for 430 Guests and 210 Jeeps, however 415 Guests and 205 jeeps were in actual resulting in Gain to extent of $ 385 NOTE 4 The Administrative expenses were expected to be for 430 guests, however 415 guests were in actual hence $15 Gain arose for administrative Expenses
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