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

For example, vessel operating costs should be $6,600 per month plus $479.00 per cruise plus $3.10 per passenger. The company’s sales should average $31.00 per passenger. The company’s planning budget for July is based on 54 cruises and 3,200 passengers.

Required: Complete the company’s planning budget for July.

Fixed Cost per Month $6,600 $2,300 $5,500 $3,900 Cost per Cost per Cruise Passenger $ 479.00 3.10 Vessel operating costs Advertising Administrative costs Insurance $ 36.00 1.50

Explanation / Answer

Company's planning budget :

Revenue 99200 Expenses : Vessel operating costs 42386 Advertising 2300 Administrative costs 12244 Insurance 3900 Total expenses 60830 Net operating income 38370

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