Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. 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 81 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below: For example, vessel operating costs should be $6,100 per month plus $472.00 per cruise plus $3.50 per passenger. The company's sales should average $31.00 per passenger. In July, the company provided 52 cruises for a total of 3,000 passengers Required: Prepare the company's flexible budget for July. You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has: Bsked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs: You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Duting March, the company worked 19,000 machine hours and produced 13,000 units. The compary had originally planned to work 21,000 machine-houts during March. Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March Mllano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria's owner has determined that the shop has two major cost drivers-the number of pizzas sold and the number of deliveries made. The pizzeria's cost formulas appear below: In November, the pizzeria budgeted for 1710 plzzas at an average seling price of $20 per pizza and for 190 deliveries. In November, the pizzeria budgeted for 1,710 pizzas at an average selling price of $20 per pizza and for 190 deliveries. Data concerning the pizzeria's actual results in November were as follows: Required: 1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Tiptop Flight School offers flying lessons at a small municipal airport. The school's owner and manager has been attempting to evaluate performance and control costs using a variance report that compares the planning budget to actual results. A recent variance report appears below: After several months of using these reports, the owner has become frustrated. For example, she is quite confident that instructor wages were very tightly controlled in July, but the report shows an unfavorable variance. The planning budget was developed using the following formulas, where q is the number of lessons sold: After several months of using these reports, the owner has become frustrated. For example, she is quite confident that instructor wages were very tightly controlled in July, but the report shows an unfavorable variance. The planning budget was developed using the following formulas, where q is the number of lessons sold: Required: 2. Complete the flexible budget performance report for the school for July. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (l.e., zero variance). Input all amounts as positive values.)
