EXERCISE 9–4 Prepare a Flexible Budget Performance Report [LO9–4]
Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State
that explosively erupted in 1982. Data concerning the company’s operations in July appear below:

Vulcan Flyovers
Operating Data
For the Month Ended July 31
Actual
Results
Flexible
Budget
Planning
Budget
Flights ( q ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 48 50
Revenue ($320.00 q ) . . . . . . . . . . . . . . . . . . . . . . . . . . $13,650 $15,360 $16,000
Expenses:
Wages and salaries ($4,000 1 $82.00 q ) . . . . . . . . . 8,430 7,936 8,100
Fuel ($23.00 q ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,260 1,104 1,150
Airport fees ($650 1 $38.00 q ) . . . . . . . . . . . . . . . . . 2,350 2,474 2,550
Aircraft depreciation ($7.00 q ) . . . . . . . . . . . . . . . . . . 336 336 350
Office expenses ($190 1 $2.00 q ) . . . . . . . . . . . . . . 460 286 290
Total expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,836 12,136 12,440
Net operating income . . . . . . . . . . . . . . . . . . . . . . . . . $ 814 $ 3,224 $ 3,560

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