(30 points) Opilio, Inc. operates a king crab fishing boat in the Bering Sea. Management has identified two cost driversthe number of days the boat is at sea and number of crab pots set or placed to catch crabthat it uses in its budgeting and performance reports. Data concerning the companys cost formulas appear below:

Costs per Cost per Cost per Fixed costs day pot set crab

Vessel operating costs $ Captain's cost Crew costs Licenses 2,500,000 Insurance 375,000

500,000 200,000 -

$ 1,600 750 2,000 25,000 3,250

$

125 $- - 3 100 3 - - - -

Management expects that the boat will operates approximately 84 days each year. It takes a full day of sailing for the boat to reach the crab grounds. Once there, it takes a day to set (i.e., place the baited crab pot in place under water) the 200 crab pots on board. The pots are allowed to soak for two days. On the third day, the pots are retrieved along with the crabs inside. On the fourth day, the pots are set again, and the cycle repeats. After three cycles, the boat sales for a full day to offload its catch at the processing facility. The boat then spends a full day sailing back to the crab fishing grounds and repeats the process. Altogether, the boat is expected to set and retrieve the carb pots 18 times during the season.

Management expects each pot will contain 35 king crab weighing approximately 8 pounds each. In the recent past, the processor has been paying $40 per pound for king crab.

Required:

Prepare the companys flexible budget for the next crab fishing season.

For the season, Opilio caught 150,000 crab with an average weight of 7.5 pounds, and

sold them at an average price of $43.25 per pound. The boat was active for a total of 90 days, and it set the 220 crab pots it carried 20 times during. Actual vessel operating costs were $1,175,000, actual captains costs were $815,000, actual crew costs were $935,000, actual licensing costs were $4,750,000, and actual insurance costs were $620,500. Prepare Opilios flexible budget for the season.

Prepare Opilios flexible budget performance report for the season, including both the spending and activity variances