Chapter 9, Problem 3E

Prepare a Flexible Budget with More Than One Cost Driver
Alyeski Tours operates day tours of coastal glaciers in Alaska on its tow boat the Blue Glacer. 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 80 passengers can be accommodated on the tour boat. Data concerning the companys cost formulas appear below:

For example, vessel operating costs should be Ss.200 per month plus $480 per cruise plus $2 per passenger. The company’s sales should average S2S per passenger. In July. the company provided 24 cruises for a total of 1,400 passengers.
Required: Using Exhibit 9−7 as your guide, prepare the company’s flexible budget for July.