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
|
|
|
Planning Budget
|
Flexible Budget
|
Actual Results
|
|
Flights (q)
|
50
|
48
|
48
|
|
Revenue ($320.00q)
|
$16,000
|
$15,360
|
$13,650
|
|
Expenses:
|
|
|
|
|
Wages and salaries ($4,000 + $82.00q)
|
8,100
|
7,936
|
8,430
|
|
Fuel ($23.00q)
|
1,150
|
1,104
|
1,260
|
|
Airport fees ($650 + $38.00q)
|
2,550
|
2,474
|
2,350
|
|
Aircraft depreciation ($7.00q)
|
350
|
336
|
336
|
|
Office expenses ($190 + $2.00q)
|
290
|
286
|
460
|
|
Total expense
|
12,440
|
12,136
|
12,836
|
|
Net operating income
|
$3,560
|
$3,224
|
$814
|
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.
1) Prepare a flexible budget performance report for July
2) Which of the variances should be of concern to management? Explain.