Rolands Jeep Tours operates jeep tours in the heart of the Blue Ridge Mountains. 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 guest Variable element per jeep

Revenue $0 $132 $0

Tour guide wages $0 $0 $158

Vehicle expenses $4,700 $13 $79

Admin. expenses $2,100 $2 $0

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:

Rolands Jeep Tours Income Statement For the Month Ended September 30 Actual guests 481 Actual jeeps 153

Revenue $62,222

Expenses:

Tour guide wages 23,664

Vehicle expenses 22,530

Administrative expenses 3,122

Total expense 49,316

Net operating income $12,906

Required:

First, create a flexible budget for the month of September.

Next, using this flexible budget and the actual results, prepare a variance report showing the company's revenue and spending variances for September.

Finally, label each variance as favorable (F) or unfavorable (U).