| Velazques Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The companybases 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 | $ | 83 | $ | 0 | |||
| Tour guide wages | $ | 0 | $ | 0 | $ | 103 | |||
| Vehicle expenses | $ | 3,300 | $ | 7 | $ | 53 | |||
| Administrative expenses | $ | 1,400 | $ | 1 | $ | 0 | |||
| In March, the company budgeted for 353 guests and 123 jeeps. The company’s income statement showing the actual results for the month appears below: |
| Velazques Jeep Tours Income Statement For the Month Ended March 31 |
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| Actual guests | 346 | |
| Actual jeeps | 125 | |
| Revenue | $ | 28,658 |
| Expenses: | ||
| Tour guide wages | 12,625 | |
| Vehicle expenses | 12,467 | |
| Administrative expenses | 1,746 | |
| Total expense | 26,838 | |
| Net operating income | $ | 1,820 |
| Required: |
| Prepare a report showing the company’s activity variances for March. Label each variance as favorable (F) or unfavorable (U). (Input all amounts as positive values. Leave no cells blank – be certain to enter “0” wherever required. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.) |
| Velazques Jeep Tours Activity Variances For the Month Ended March 31 |
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| Revenue | $ | (Click to select)NoneFU |
| Expenses: | ||
| Tour guide wages | (Click to select)NoneFU | |
| Vehicle expenses | (Click to select)FNoneU | |
| Administrative expenses | (Click to select)FUNone | |
| Total expense | (Click to select)UNoneF | |
| Net operating income | $ | (Click to select)UNoneF |
|
Activity Variances |
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| For the Month Ended March 31 | |||
| Actual guests | 346 | 353 | |
| Actual jeeps | 125 | 126 | |
| Revenue | 28658 | 29299 | 641 F |
| Expenses: | |||
| Tour guide wages | 12625 | 12978 | 353 U |
| Vehicle expenses | 12467 | 12449 | 18 F |
| Administrative expenses | 1746 | 1753 | 7 U |
| Total expense | 26838 | 27180 | 342 U |
| Net operating income | 1820 | 2119 | 299 U |
