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: Vulcan Flyovers Operating Data For the Month Ended July 31

                Actual Results Flexible Budget Planning Budget

Flights (q)            62                            62    60

Revenue ($355.00q) $ 16,100 $ 22,010             $ 21,300

Expenses:

Wages and salaries ($3,000 + $89.00q) 8,480 8,518       8,340

Fuel ($30.00q)    2,030                     1,860    1,800

Airport fees ($880 + $32.00q) 2,759    2,864 2,800

Aircraft depreciation ($10.00q) 620 620                    600

Office expenses ($200 + $1.00q) 430 262 260

Total expense                            14,319    14,124    13,800

Net operating income    $ 1,781 $ 7,886              $ 7,500

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. Complete the flexible budget performance report abstract for July. (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.)

Explanation / Answer

Actual results Revenue and spending variances Flexible budget Spending variances Planning budget Revenue 16100 5910 U 22010 710 F 21300 Expenses: Wages and salaries 8480 38 F 8518 178 U 8340 Fuel 2030 170 U 1860 60 U 1800 Airport fees 2759 105 F 2864 64 U 2800 Aircraft depreciation 620 0 None 620 20 U 600 Office expenses 430 168 U 262 2 U 260 Total expense 14319 195 U 14124 324 U 13800 Net operating income   1781 6105 U 7886 386 F 7500

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