Asked by Ghost Nappa on Jul 09, 2024
Verified
Morles 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 407 guests and 113 jeeps. The company's income statement showing the actual results for the month appears below:
Required:Prepare a flexible budget performance report showing both the company's activity variances and 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, such as machine-hours or labor hours, influencing direct and indirect costs.
Guests
Individuals invited to partake or be present in an event, establishment, or locale.
Jeeps
A brand known for manufacturing rugged off-road and sports utility vehicles.
- Assess budget variances to establish if they indicate good or bad financial health.
- Unpack financial performance rates by utilizing flexible budget reports.
- Channel the application of formulas concerning costs and revenues to produce budget accounts.
Verified Answer
VP
Learning Objectives
- Assess budget variances to establish if they indicate good or bad financial health.
- Unpack financial performance rates by utilizing flexible budget reports.
- Channel the application of formulas concerning costs and revenues to produce budget accounts.
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