Desert Flyovers offers scenic overflights of Death Valley in Eastern California. Data concerning the companys operations in July appear below: Desert Flyovers Budget For the Month Ended July 31 Planning Budget Flexible Budget Flights (q) .............................................. 100 ? Revenue ($330q) .................................... ? ? Expenses: Wages & Salaries ($9,000 + $85q) ? ? Fuel ($25q) ? ? Airport fees ($1,200 + $40q) ................ ? ? Aircraft depreciation ($10q) .................. ? ? Office expenses ($400 + $5q) .............. ? ? Net operating income .............................. $ ? $ ? The actual results for July were as follows: Flights (q) ......................................... 110 Revenue .................................. $36,000 Variable Expenses ..................... $22,000 Fixed expenses ........................... 10,000 The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required: 1. Prepare a flexible budget performance report for July by using contribution format income statement.

2. Calculate the companys activity variance for revenue, revenue variance, spending variance for variable expense and spending variance for fixed expense.

3. Which of the variances should be of concern to management? Explain.

[Q3] Solve the problem i- Desert Flyovers offers scenic overflights of Death Valley in Eastern California. Data concerning the company's operations in July appear below: The actual results tor July were as follows: Flights (q) 110 Revenue $36,000 Variable Expenses $22,000 Fixed expenses ...................... 10,000 The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount. Required: 1. Prepare a flexible budget performance report for July by using contribution format ncome statement. 6 2. Calculate the company's (1)activity variance for revenue, (2) revenue variance, (3) spending variance for variable expense and (4) spending variance for fixed expense. 3. Which of the variances should be of concern to management? Explaji