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

For example, vessel operating costs should be $6,500 per month plus $473.00 per cruise plus $3.30 per passenger. The company’s sales should average $28.00 per passenger. The company’s planning budget for July is based on 59 cruises and 3,050 passengers.

Complete the company’s planning budget for July.

For example, vessel operating costs should be $6,500 per month plus $473.00 per cruise plus $3.30 per passenger. The company’s sales should average $28.00 per passenger. The company’s planning budget for July is based on 59 cruises and 3,050 passengers.

Vessel operating costs Advertising Administrative costs Insurance Fixed Cost Cost per Cost per Per Month Cruise Passenger $ 6,500 $473.00 $ 3.30 $ 2,400 $ 5,400 37.00 1.50 $ 3,800

Explanation / Answer

Calculations:

Revenue = 3050*28 = 85400

Vessel operating cost = 6500+(473*59)+(3050*3.3) = 44472

Administrative cost = 5400+(37*59)+(3050*1.5) = 12158

Revenue 85,400.00 expenses: Vessel operating costs 44,472.00 Advertising 2,400.00 Administrative costs 12,158.00 Insurance 3,800.00 Total expense 62,830.00 Net operating income 22,570.00

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