Asked by Riski Prasetyo Putro on Jun 06, 2024
Verified
Mcinerney 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 October, the company budgeted for 325 guests and 91 jeeps. The actual activity for the month was 340 guests and 96 jeeps.Required:Prepare the company's flexible budget for the actual level of activity in October.
Cost Drivers
Factors that cause the cost of an activity or operation to increase or decrease, such as machine hours, labor hours, or the volume of production.
Flexible Budget
A budget that adjusts or flexes for changes in the volume of activity, providing a more useful comparison of actual to budgeted performance.
Guests
Individuals who receive services or hospitality, often in contexts such as hotels, restaurants, or events.
- Prepare flexible budgets based on actual activity levels.
Verified Answer
Learning Objectives
- Prepare flexible budgets based on actual activity levels.
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