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Irina-Kira [14]
3 years ago
10

Cryan Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases its budgets on two measures of acti

vity (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 Variable element Variable element
per month per guest per jeep
Revenue $ 0 $ 207 $ 0
Tour guide wages $ 0 $ 0 $ 162
Vehicle expenses $ 5,500 $ 14 $ 69
Administrative expenses $ 2,000 $ 13 $ 0
In May, the company budgeted for 492 guests and 197 jeeps. The company's income statement showing the actual results for the month appears below:
Cryan Jeep Tours
Income Statement
For the Month Ended May 31
Actual guests 507
Actual jeeps 192
Revenue $ 82,854
Expenses:
Tour guide wages 32,357
Vehicle expenses 20,140
Administrative expenses 7,388
Total expense 59,885
Net operating income $ 22,969
Required:
Prepare a report showing the company's revenue and spending variances for May. Label each variance as favorable (F) or unfavorable
Business
1 answer:
Jobisdone [24]3 years ago
8 0

Answer and Explanation:

The preparation of the report showing the company revenue and spending variance is shown below:

                                     Cryan Jeep Tours

                       Revenue and Spending Variances

                           For the Month Ended May 31

Particulars    Actual Results Flexible Budget Revenue & Spending Variances

Guests             507                          507

Jeeps              192                           192

Revenue        $82,854                   $104,949               $22,095 U    (A)

                                                     (507 ×$207)

Expenses:    

Tour guide wages $32,357           $31,104                  $1,253 U

                                                    (192 × $162)

Vehicle expenses $20,140            $25,846                $5,706 F

                                         ($5,500 + 507 × $14 + 192 × $69)

Administrative expenses $7,388   $8,591                   $1,203 F

                                              ($2,000 + 507 × $13 )

Total expense   $59,885                $65,541                 $5,656 F   (B)

Net operating income $22,969      $39,408               $16,439 U  (A - B)

We simply deduct all expenses from the revenues so that the net operating income could come  

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