Asked by Adrianaya Roettger on Jun 13, 2024
Verified
Cryan Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases 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:
In May, the company budgeted for 447 guests and 152 jeeps. The company's income statement showing the actual results for the month appears below:
Required:Prepare a report showing the company's revenue and spending variances for May. Label each variance as favorable (F) or unfavorable (U).
Cost Drivers
Factors that cause a change in the cost of an activity, used in activity-based costing to allocate costs accurately.
Revenue Variances
The difference between actual revenue and budgeted or projected revenue.
Spending Variances
The difference between actual spending and budgeted or planned spending in various categories.
- Analyze fluctuations in actions and designate them as encouraging or adverse.
- Assess the fiscal performance of a business by evaluating its activity variances.
Verified Answer
AA
Learning Objectives
- Analyze fluctuations in actions and designate them as encouraging or adverse.
- Assess the fiscal performance of a business by evaluating its activity variances.