Prepare a Flexible Budget
Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company's planning budget for May appears below:
During May, the company's activity was actually 105 diving-hours. Prepare a flexible budget for that level of activity.
Prepare a Flexible Budget Performance Report
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:
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. Prepare a flexible budget performance report for July.
- 2. Which of the variances should be of concern to management? Explain.
Critique a Variance Report
The Terminator Inc. provides on-site residential pest extermination services. The company has several mobile teams who are dispatched from a central location in company-owned trucks. The company uses the number of jobs to measure activity. At the beginning of April, the company budgeted for 100 jobs, but the actual number of jobs turned out to be 105. A report comparing the budgeted revenues and costs to the actual revenues and costs appears below:
Required:
Is the above variance report useful for evaluating how well revenues and costs were controlled during April? Why, or why not?