1. Prepare flexible budgets for the company based on the following activity levels:

(a) 32 000 air-kilometres.

(b) 35 000 air-kilometres.

(c) 38 000 air-kilometres.

2. How to prepare a revised performance report showing the proper variances for April, based on the flexible budget that you prepared.

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Fantastic Sky Tours Pty Ltd Performance Report for the month of April 2020 Formula Static Actual flexible budget budget (per air-km) (32 000 air-km) Variance (35 000 air-km) Passenger revenue $3.50 $112.000 $122 500 $10 500 U Less Variable costs: Fuel 0.50 17 000 17 500 500 F Aircraft maintenance 0.75 23 500 26 250 2 750 F Flight crew salaries 0.40 13 100 14 000 Selling and administration 0.80 24 900 28 000 900 F 3 100 F Total variable expenses $2.45 $ 78 500 $ 85 750 $ 7 250 F Contribution margin $1.05 $ 33 500 $ 36 750 $ 3 250 U Less Fixed costs: Depreciation on aircraft $2.900 $ 2,900 $ 2 900 $ 0 Landing fees 900 1 000 900 100 U Supervisory salaries 9 000 8 600 Selling and administrative 11 000 12 400 9 000 11 000 400 F 1 400 U Total fixed expenses $23 800 $ 24 900 Net profit $ 8 600 $ 23 800 $ 12.950 $ 1100 U $ 4350 U Fantastic Sky Tours Pty Ltd Performance Report for the month of April 2020 Formula Static Actual flexible budget budget (per air-km) (32 000 air-km) Variance (35 000 air-km) Passenger revenue $3.50 $112.000 $122 500 $10 500 U Less Variable costs: Fuel 0.50 17 000 17 500 500 F Aircraft maintenance 0.75 23 500 26 250 2 750 F Flight crew salaries 0.40 13 100 14 000 Selling and administration 0.80 24 900 28 000 900 F 3 100 F Total variable expenses $2.45 $ 78 500 $ 85 750 $ 7 250 F Contribution margin $1.05 $ 33 500 $ 36 750 $ 3 250 U Less Fixed costs: Depreciation on aircraft $2.900 $ 2,900 $ 2 900 $ 0 Landing fees 900 1 000 900 100 U Supervisory salaries 9 000 8 600 Selling and administrative 11 000 12 400 9 000 11 000 400 F 1 400 U Total fixed expenses $23 800 $ 24 900 Net profit $ 8 600 $ 23 800 $ 12.950 $ 1100 U $ 4350 U