Chapter 9 Flexible Budgets & Performance Analysis Question (25 points)
Actual Results
Flexible Budget
Planning Budget
Flights(q)
96
96
100
Revenue ($320q)
$ 27,300
$ 30,720
$ 32,000
Expenses:
Wages and Salaries ($4,000+$82q)
$ 12,860
$ 11,872
$ 12,200
Fuel ($23q)
$ 2,520
$ 2,208
$ 2,300
Airport Fees ($650 + $38q)
$ 4,050
$ 4,298
$ 4,450
Helicopter Depreciation ($7q)
$ 672
$ 672
$ 700
Office Expenses ($190 +$2q)
$ 730
$ 382
$ 390
Total Expense
$ 20,832
$ 19,432
$ 20,040
Net Operating Income
$ 6,468
$ 11,288
$ 11,960
Given:
Mauna Loa Helicopters offers scenic rides over Mauna Loa, an active volcano on the island of Hawaii.
Operational data for April appear to the left. The company measures its activity in terms of
helicopter trips. Customers can buy individual tickets for scenic rides or hire an entire helicopter for
a discounted scenic ride.
Required:
1. Using Exhibit 9-8 as your guide, prepare a flexible budget performance report for April to the left
or in a separate file or paper calculation that includes revenue and spending variances and activity
variances.
2. Which of the variances should be prioritized for investigation by management, and why?