Question # 3

Gauci Company operates tours in the mountains. Gauci Company bases its budgets on two measures of activity, namely guests and jeeps. Each jeep is used on one tour on one day and has one tour guide. Gauci Company uses the following data in its budgeting:

Fixed element per monthVariable element per guestVariable element per jeepRevenue0$1550Tour guide wages00$161Vehicle expenses$5,200$17$99Administrative expenses$2,700$50

In September, the company budgeted for 456 guests and 155 jeeps. The company's income statement showing the actual results for the month appears below:

Gauci CompanyIncome StatementFor the Month Ended September 30Actual guests501Actual jeeps164Revenue$71,398Expenses: Tour guide wages$24,559Vehicle expenses$25,760Administrative expenses$5,762Total expenses$56,081Net operating income$15,317

Instructions:

Prepare a report showing the company's revenue and spending variances for September. Label each variance as favorable (F) or unfavorable (U).