Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost driversthe number of cruises and the number of passengersthat 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 89 passengers can be accommodated on the tour boat. Data concerning the companys cost formulas appear below:

Fixed Cost per Month

Cost per Cruise

Cost per Passenger

Vessel operating costs

$

6,600

$

473.00

$

3.30

Advertising

$

2,700

Administrative costs

$

5,700

$

38.00

$

1.50

Insurance

$

3,200

For example, vessel operating costs should be $6,600 per month plus $473.00 per cruise plus $3.30 per passenger. The companys sales should average $35.00 per passenger. In July, the company provided 59 cruises for a total of 3,050 passengers.

Required:

Prepare the companys flexible budget for July.

Alyeski Tours

Flexible Budget

For the Month Ended July 31

Revenue

Expenses:

Vessel operating costs

Advertising

Administrative costs

Insurance

Total expense

Net operating income

Alyeski Tours Flexible Budget For the Month Ended July 31 Revenue Expenses: Vessel operating costs Advertising Administrative costs Insurance Total expense Net operating income