Question 3 20 marks a. Metro Jeep Tours operates jeep tours in Queenstown. The company bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company uses the following data in its budgeting: Fixed element per month Variable element per jeep ($) 0 Variable element per guest ($) 100 0 13 2 Revenue Tour guide wages Vehicle expenses Administrative expenses 164 0 0 3,700 1,600 49 0 In May, the company budgeted for 407 guests and 113 jeeps. The company's income statement showing the actual results for the month appears below: 402 112 39,740 Metro Jeep Tours Income Statement For the Month Ended May 31 Actual guests Actual jeeps Revenue $ Expenses: Tour guide wages Vehicle expenses Administrative expenses Total expense Net operating income $ 18,178 14.604 2,374 35,156 4,584 Required (show your calculations): . Prepare a flexible budget performance report showing both the company's activity variances and revenue and spending variances for May. Label each variance as favourable (F) or unfavourable (U). (12 marks) ii. With reference to (i), comment on the potential reasons for the "revenue variance" and the "vehicle expenses variance". (4 marks) b. Watties Corporation has a Cleaning Services Department that services the company's Maintenance Department and its two operating departments. Costs of the Cleaning Services Department are allocated to other departments on the basis of square feet of space occupied. The amount of space occupied by each department is given below: Cleaning Services Maintenance Operating Department 1 Operating Department 2 4,000 square feet 6,000 square feet 30,000 square feet 60,000 square feet Budgeted costs in the Cleaning Services Department total $43,200. Suppose the company uses the step-down method of allocation and the costs of the Cleaning Services Department are allocated first. Required (show your calculations): Calculate the amount of Cleaning Services Department cost that would be allocated to the Maintenance Department. (4 marks)