Bruer Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The c
ID: 2582874 • Letter: B
Question
Bruer Jeep Tours operates jeep tours in the heart of the Colorado Rockies. 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:
In November, the company budgeted for 358 guests and 153 jeeps. The actual activity for the month was 378 guests and 144 jeeps.
Required:
Prepare a report showing the company's activity variances for November. Label each variance as favorable (F) or unfavorable (U). (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance) next to the "Activity Variances" column. Input all amounts as positive values.)
Explanation / Answer
ans)
Planning budget Flexible Budget Activity variances
Guests (q1) 358 378
Jeeps (q2) 153 144
Revenue ($171 X q1) 61218 64638 3420 (F)
Expenses:
Tour guide wages ($184 X q2) 28152 26496 1656 (F)
Vehicle expenses 20103 19854 249 (F)
(5400 + $15Xq1 + $61Xq2)
Administrative expenses 4648 4768 120 (U)
(2500 + 6X q1)
Total expense 52903 51118 1785 (F)
Net operating income 8315 13520 5205 (F)
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