Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 90 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below: Fixed Cost per Month Cost per Cruise Cost per Passenger Vessel operating costs $ 6,700 $ 472.00 $ 3.40 Advertising $ 2,500 Administrative costs $ 5,300 $ 36.00 $ 1.50 Insurance $ 3,700 For example, vessel operating costs should be $6,700 per month plus $472.00 per cruise plus $3.40 per passenger. The company’s sales should average $28.00 per passenger. In July, the company provided 55 cruises for a total of 3,050 passengers. Required: Prepare the company’s flexible budget for July.
Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 90 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below: Fixed Cost per Month Cost per Cruise Cost per Passenger Vessel operating costs $ 6,700 $ 472.00 $ 3.40 Advertising $ 2,500 Administrative costs $ 5,300 $ 36.00 $ 1.50 Insurance $ 3,700 For example, vessel operating costs should be $6,700 per month plus $472.00 per cruise plus $3.40 per passenger. The company’s sales should average $28.00 per passenger. In July, the company provided 55 cruises for a total of 3,050 passengers. Required: Prepare the company’s flexible budget for July.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 90 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below:
| Fixed Cost per Month | Cost per Cruise | Cost per Passenger | |
|---|---|---|---|
| Vessel operating costs | $ 6,700 | $ 472.00 | $ 3.40 |
| Advertising | $ 2,500 | ||
| Administrative costs | $ 5,300 | $ 36.00 | $ 1.50 |
| Insurance | $ 3,700 |
For example, vessel operating costs should be $6,700 per month plus $472.00 per cruise plus $3.40 per passenger. The company’s sales should average $28.00 per passenger. In July, the company provided 55 cruises for a total of 3,050 passengers.
Required:
Prepare the company’s flexible budget for July.
Transcribed Image Text:**Alyeski Tours**
**Flexible Budget**
**For the Month Ended July 31**
| | Amount |
|-------------------------------|----------|
| Revenue | |
| **Expenses:** | |
| - Vessel operating costs | |
| - Advertising | |
| - Administrative costs | |
| - Insurance | |
| **Total expense** | |
| **Net operating income** | |
This table is a template for creating a flexible budget for Alyeski Tours for the month ending July 31. It includes sections for revenue and various expenses, such as vessel operating costs, advertising, administrative costs, and insurance. The total expense and net operating income are calculated by summing up the expenses and subtracting them from the revenue.
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