Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Wa

Question

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) 48 48 50 Revenue ($320.00q) $ 13,650 $ 15,360 $ 16,000 Expenses: Wages and salaries ($4,000 + $82.00q) 8,430 7,936 8,100 Fuel ($23.00q) 1,260 1,104 1,150 Airport fees ($650 + $38.00q) 2,350 2,474 2,550 Aircraft depreciation ($7.00q) 336 336 350 Office expenses ($190 + $2.00q) 460 286 290 Total expense 12,836 12,136 12,440 Net operating income $ 814 $ 3,224 $ 3,560

Explanation / Answer

Actual Revenue and spending variances Flexible budget Activity variances Planning budget Flights 48 48 50 Revenue 13650 1710 U 15360 640 U 16000 Expenses: Wages and salaries 8430 494 U 7936 164 F 8100 Fuel 1260 156 U 1104 46 F 1150 Airport fees 2350 124 F 2474 76 F 2550 Aircraft depreciation 336 0 None 336 14 F 350 Office expenses 460 174 U 286 4 F 290 Total expense 12836 700 U 12136 304 F 12440 Net operating income 814 2410 U 3224 336 U 3560

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