Exercise 9-4Prepare a Flexible Budget Performance Report [LO4]

Mt. Hood Air offers scenic overflights of Mt. hood and the Columbia River gorge. Data concerning the company’s operations in August appear below:
Mt. Hood Air
Operating Data
For the Month Ended August 31

Planning budget flexible budget Actual results
Flights (q)…………………………………………………… 50 52 52
Revenue ($360.00q)…………………………………… $18,000 $18,720 $16,980
Expenses:
wages and salaries ($3,800+$92.00q)……… $8,400 $8,584 $8,540
fuel ($34.00q)…………………………………………. 1,700 1,768 1,930
Airport fees ($870+$35.00q)…………………… 2,620 2,690 2,690
Aircraft Depreciation ($11.00q)………………. 550 572 572
Office expense ($230+ $1.00q)……………….. 280 282 450
Total expense…………………………………………… $13,550 $13,896 $14,182
Net operating income………………………………. $4,450 $4,824 $2,798

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

1. Prepare a flexible budget performance report for August.

2. Which of the variances should be of concern to management? Explain in detail.