Problem: Preparing a Flexible Budget Performance Report
Canyonland Boat Charter Service rents live-aboard houseboats for cruising on the lake that traverses most of the Glen Canyon National Recreation area in Southern Utah. The company bases its overhead cost budgets on the following data:
|
Variable overhead costs
|
|
|
|
|
Cleaning
|
$
|
72.50
|
per charter
|
|
Maintenance
|
$
|
56.25
|
per charter
|
|
Park usage fees
|
$
|
15.75
|
per charter
|
|
|
|
|
|
|
Fixed overhead costs
|
|
|
|
|
Salaries and wages
|
$
|
7,860
|
per month
|
|
Depreciation
|
$
|
13,400
|
per month
|
|
Utilities
|
$
|
720
|
per month
|
|
Moorage
|
$
|
3,670
|
per month
|
Each time a boat is chartered, whether it is for one day or a week, certain costs must be incurred. Those costs are listed above under the variable overhead costs. For example, each time a boat returns from a charter, it must be thoroughly cleaned, which costs $72.50 on average.
In August, the following actual costs were incurred for 140 charters:
|
Cleaning
|
$
|
10,360
|
|
Maintenance
|
$
|
7,630
|
|
Park usage fees
|
$
|
2,210
|
|
Salaries and wages
|
$
|
7,855
|
|
Depreciation
|
$
|
14,450
|
|
Utilities
|
$
|
735
|
|
Moorage
|
$
|
3,950
|
Due to an unanticipated surge in demand for charters, the company purchased a new boat in August to add to its charter fleet.
Required:
Construct a Flexible Budget Performance Report for Canyonland Boat Charter Service for August.
Canyonland Boat Charter Service
Flexible Budget Performance Report
For the Month Ended August 31
Cost Formula Actual Costs Flexible Budget Variance
(per charter) Incurred for Based on
140 Charters 140 Charters
Variable overhead costs:
Cleaning
Maintenance
Park usage fees
Total variable overhead cost
Fixed overhead costs:
Salaries and wages
Depreciation
Utilities
Moorage
Total fixed overhead cost
Total overhead cost