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EXERCISE 9 4 Prepare a Flexible Budget Performance Report LO4 Mt Hood Air offers scenic overflights of Mt. Hood and the Columbia River gorge Data concerning the company’s operations in August

EXERCISE 9–4 Prepare a Flexible Budget Performance Report [LO4]

Mt. Hood Air offers scenic overflights of Mt. Hood and the Columbia River gorge. Data concern- ing the company’s operations in August appear below:

 

 

 

 

 

 

Planning Budget

 

Flexible Budget

 

Actual Results

Flights (q) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50

 

52

 

52

Revenue ($360.00q). . . . . . . . . . . . . . . . . . . . . . .

$18,000

 

$18,720

 

$16,980

Expenses:

Wages and salaries ($3,800 + $92.00q) . . . . .

 

8,400

 

 

8,584

 

 

8,540

Fuel ($34.00q) . . . . . . . . . . . . . . . . . . . . . . . . . .

1,700

 

1,768

 

1,930

Airport fees ($870 + $35.00q) . . . . . . . . . . . . .

2,620

 

2,690

 

2,690

Aircraft depreciation ($11.00q) . . . . . . . . . . . . . .

550

 

572

 

572

Office expenses ($230 + $1.00q) . . . . . . . . . . .

280

 

282

 

450

Total expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,550

 

13,896

 

14,182

Net operating income . . . . . . . . . . . . . . . . . . . . . .

$  4,450

 

$ 4,824

 

$ 2,798

 

 

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 August.

2.       Which of the variances should be of concern to management? Explain.

Jun 28 2020 View more View Less

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