Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management identified two cost drivers for budgeting purposes-the number of cruises and the number of passengers. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 80 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below: Vessel operating costs Advertising Fixed Cost per Cost per Month Cruise $ 6,400 $ 479.00 $ 2,100 Cost per Passenger $ 3.50 $ 5,500 $ 40.00 $ 3,800 $ 1.50 Administrative costs Insurance For example, vessel operating costs should be $6,400 per month plus $479.00 per cruise plus $3.50 per passenger. The company's sales should average $34.00 per passenger. In July, the company provided 55 cruises for a total of 3,100 passengers. Required: Prepare the company's flexible budget for July. Alyeski Tours Flexible Budget For the Month Ended July 31 Revenue Expenses: Vessel operating costs Advertising Administrative costs Insurance Total expenses Net operating income
Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management identified two cost drivers for budgeting purposes-the number of cruises and the number of passengers. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 80 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below: Vessel operating costs Advertising Fixed Cost per Cost per Month Cruise $ 6,400 $ 479.00 $ 2,100 Cost per Passenger $ 3.50 $ 5,500 $ 40.00 $ 3,800 $ 1.50 Administrative costs Insurance For example, vessel operating costs should be $6,400 per month plus $479.00 per cruise plus $3.50 per passenger. The company's sales should average $34.00 per passenger. In July, the company provided 55 cruises for a total of 3,100 passengers. Required: Prepare the company's flexible budget for July. Alyeski Tours Flexible Budget For the Month Ended July 31 Revenue Expenses: Vessel operating costs Advertising Administrative costs Insurance Total expenses Net operating income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management identified two cost drivers
for budgeting purposes-the number of cruises and the number of passengers. The company publishes a schedule of day cruises that
it may supplement with special sailings if there is sufficient demand. Up to 80 passengers can be accommodated on the tour boat.
Data concerning the company's cost formulas appear below:
Vessel operating costs
Advertising
Fixed
Cost per Cost per
Month Cruise
$ 6,400 $ 479.00
$ 2,100
Cost per
Passenger
$ 3.50
$ 5,500 $ 40.00
$ 3,800
$ 1.50
Administrative costs
Insurance
For example, vessel operating costs should be $6,400 per month plus $479.00 per cruise plus $3.50 per passenger. The company's
sales should average $34.00 per passenger. In July, the company provided 55 cruises for a total of 3,100 passengers.
Required:
Prepare the company's flexible budget for July.
Alyeski Tours
Flexible Budget
For the Month Ended July 31
Revenue
Expenses:
Vessel operating costs
Advertising
Administrative costs
Insurance
Total expenses
Net operating income
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