Question
Ushak company which sells private airplanes and rents the helicopters for tours around Switzerland. Until 20x1, there was no accounting department at the company. Routine
Ushak company which sells private airplanes and rents the helicopters for tours around Switzerland. Until 20x1, there was no accounting department at the company. Routine tasks, such as billing, were handled by someone with little formal accounting training. However, as the company grew, the owner recognized the need for more formal accounting procedures. Ann Heather has been hired as the company's new controller. Heather received the following performance evaluation during her first week on the job. Ashik Aspan, the company's manager of aircraft operations, had prepared the report and planned to present it to the owner the next morning. Take a look at these favorable variances for fuel and so on, Aspan said. My operations team is doing an excellent job. Later that day, Ann took a closer look at the performance report.
Based on the information in Ashyk Aspans report, prepare a performance report for September using air miles as the cost driver.
- In spite of several favorable expense variances shown on Ashyk Aspans report, the companys September operating income was only about two-thirds of the expected level. Why?
- Write a brief memo to the manager of aircraft operations explaining why his variance report is misleading.
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