Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company's operations in January appear below:

		Planning Budget	Flexible Budget	Actual Results
Flights (Q)		60 flights		52 flights
Revenue* ($700Q)		$42,000		$32,760
Expenses:
Wages and salaries ($5,600 + $180Q)		16,400		15,800
Fuel ($150Q)		9,000		8,450
Airport fees ($650 + $50Q)		3,650		3,510
Aircraft depreciation ($1,500)		1,500		1,500
Office expenses ($1,400)		1,400		1,200
Total expense		31,950		30,460
Net operating income		$10,050		$2,300
*Flight revenue based on $100 per passenger and average of 7 passengers per flight.

The company measures its activity in terms of number of flights.Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required:

1. Prepare flexible budget performance report for January.

2. Which of the variances should be of most concern to management?