Mt. Hood Air offers scenic overflights of Mt. Hood and the Columbia River gorge. Data concerning the company operations in August appear below:

Mt. Hood Air Operating Data For the Month Ended August 31

Planning Flexible Actual Budget Budget Results Flights (q) .................. 50 52 53

Revenue ($360.00q) .................................... $18,000 $18,720 $16,980

Expenses:

Wages and Salaries ($3,800+$92.00q) 8,400 8,584 8,540

Fuel ($34.00q) 1,700 1,768 1,930

Airport fees ($870 + $35.00q) 2,620 2,690 2,690

Aircraft depreciation ($11.00q) 550 572 572

Office expenses ($230 + $1.00q) 280 282 450

Total Expense 13,550 13,896 14,182

Net operating income $4,450 $4,824 $2,798

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.

1. Prepare a flexible budget performance report for August.

2. Which of the variances should of concern to mgmt? Explain.