Mcinerney Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company uses the following data in its budgeting: Fixed element per month Variable element per guest Variable element per jeep Revenue $ 0 $ 161 $ 0 Tour guide wages $ 0 $ 0 $ 132 Vehicle expenses $ 4,600 $ 22 $ 75 Administrative expenses $ 3,300 $ 15 $ 0 In October, the company budgeted for 339 guests and 105 jeeps. The actual activity for the month was 410 guests and 152 jeeps. Required: Prepare the company's flexible budget for the actual level of activity in October.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Mcinerney Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company uses the following data in its budgeting:
| Fixed element per month |
Variable element per guest |
Variable element per jeep | |||||||
| Revenue | $ | 0 | $ | 161 | $ | 0 | |||
| Tour guide wages | $ | 0 | $ | 0 | $ | 132 | |||
| Vehicle expenses | $ | 4,600 | $ | 22 | $ | 75 | |||
| Administrative expenses | $ | 3,300 | $ | 15 | $ | 0 | |||
In October, the company budgeted for 339 guests and 105 jeeps. The actual activity for the month was 410 guests and 152 jeeps.
Required:
Prepare the company's flexible budget for the actual level of activity in October.
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