Please explain how to get revenue and spending variances and activity variances. Thank you.
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 Flyover Operating Data For the Month Ended July 31
Actual Flexible Planning Results Budget
Flights 56 56
Revenue $350.00 $16,000 $19,600 $19,000
Expenses:
Fuel and Salaries $3,500 $8,392
Fuel $32.00 $1,428 $1,252 $1,958
Airport fees $810 $1,728 $2,497 $2,602
Aircraft depreciation $58.00 $428 $448 $432
Office expenses ($200 $1.00) $256 $254
Total expenses $3,719 $15,262 $20,204
Net operating income $9,281 $6,074 $6,565 $5,696
The company measures its activity in terms of flights. Customers can buy overflights at a discount, individual tickets for overflights, or hire an entire plane.
Required: Determine the effect of each variance by selecting for favorable, unfavorable, or no effect (i.e. zero variance). Input all amounts as positive values.
Vulcan Flyover Flights
Revenue
Actual: $6,000
Flexible Budget: $19,600
Planning Budget: $18,900
Expenses:
Wages and Salaries
Actual: $8,302
Flexible Budget: $8,428
Planning Budget: $8,252
Fuel
Actual: $1,952
Flexible Budget: $1,792
Planning Budget: $1,728
Airport fees
Actual: $2,497
Flexible Budget: $2,602
Planning Budget: $2,538
Aircraft depreciation
Actual: $432
Flexible Budget: $448
Planning Budget: $432
Office expenses
Actual: $254
Flexible Budget: $256
Planning Budget: $254
Total expenses: $13,204
Net operating income: $5,696