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 $ 6,600 $ 471.00 $ 3.00 Advertising $ 2,300 Administrative costs $ 5,800 $ 34.00 $ 1.50 Insurance $ 3,300 For example, vessel operating costs should be $6,600 per month plus $471.00 per cruise plus $3.00 per passenger. The company’s sales should average $33.00 per passenger. In July, the company provided 54 cruises for a total of 3,150 passengers. Required: Prepare the company’s flexible budget for July.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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 $ 6,600 $ 471.00 $ 3.00
Advertising $ 2,300    
Administrative costs $ 5,800 $ 34.00 $ 1.50
Insurance $ 3,300    

 

For example, vessel operating costs should be $6,600 per month plus $471.00 per cruise plus $3.00 per passenger. The company’s sales should average $33.00 per passenger. In July, the company provided 54 cruises for a total of 3,150 passengers.

 

Required:

Prepare the company’s flexible budget for July.

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