Flexible budget & Performance Analysis Report: Activity Revenue & Spending variance Everest tour operator provides scenic over-flights of Mount Everest and K2 one of the tourist attraction for the visitors to Nepal. Data concerning company’s operation in July is presented below: Everest Tour Operator Operation Data July 31, 201_ MEASUREMENT OF ACTIVITIES Planning Budget Flexible Budget Actual Results Flights (q) 50 48 48 Revenue (Rs. 320.0 q) 16,000 15,360 13,650 Expenses Wages & Salaries (Rs. 4,000 + Rs. 82.0 q) 8,100 7,936 8,430 Fuel (Rs. 23.0 q) 1,150 1,104 1,260 Airport Fees (Rs.650 + Rs. 38.0 q) 2,550 2,474 2,350 Aircraft Depreciation (Rs. 7.0 q) 350 336 336 Office Expenses (Rs. 190 + Rs. 2.0 q) 290 286 460 Total Expenses 12,440 12,136 12,836 Net Operating Income (Rs.) 3,560 3,224 814 The company measures its activity in terms of flight, customers who buy individual tickets for over-flights or customers who hire entire plane for an over-flight at discounted rate. Required: Prepare a Flexible budget performance report for July. (6.0) Which of the variances should be of concern to management? Explain from (a) above
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Flexible budget & Performance Analysis Report: Activity Revenue & Spending variance
Everest tour operator provides scenic over-flights of Mount Everest and K2 one of the tourist attraction for the visitors to Nepal. Data concerning company’s operation in July is presented below:
Everest Tour Operator
Operation Data
July 31, 201_
|
MEASUREMENT OF ACTIVITIES |
Planning Budget |
Flexible Budget |
Actual Results |
|
|
|
|
|
|
Flights (q) |
50 |
48 |
48 |
|
Revenue (Rs. 320.0 q) |
16,000 |
15,360 |
13,650 |
|
Expenses |
|
|
|
|
Wages & Salaries (Rs. 4,000 + Rs. 82.0 q) |
8,100 |
7,936 |
8,430 |
|
Fuel (Rs. 23.0 q) |
1,150 |
1,104 |
1,260 |
|
Airport Fees (Rs.650 + Rs. 38.0 q) |
2,550 |
2,474 |
2,350 |
|
Aircraft |
350 |
336 |
336 |
|
Office Expenses (Rs. 190 + Rs. 2.0 q) |
290 |
286 |
460 |
|
Total Expenses |
12,440 |
12,136 |
12,836 |
|
Net Operating Income (Rs.) |
3,560 |
3,224 |
814 |
|
|
|
|
|
The company measures its activity in terms of flight, customers who buy individual tickets for over-flights or customers who hire entire plane for an over-flight at discounted rate.
Required:
- Prepare a Flexible budget performance report for July. (6.0)
Which of the variances should be of concern to management? Explain from (a) above
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