Question: The performance in thousands of dollars of Sandpiper Airlines for

The performance (in thousands of dollars) of Sandpiper Airlines for the most recent year is shown in the following table:

The static budget had been based on a budget of $.35 revenue per passenger mile. A passenger mile is one paying passenger flown one mile. An average airfare decrease of 6% had helped generate an increase in passenger miles flown that was 20% in excess of the static budget for the year.
The price per gallon of jet fuel rose above the price used to formulate the static budget. The average jet fuel price increase for the year was 20%.
1. Prepare a summary report similar to Exhibit 8-6, page 316 , to help the president understand performance for the most recent year.
2. Assume that jet fuel costs are purely variable, and the quantity of fuel used was at the same level of efficiency as predicted in the static budget. What part of the flexible-budget variance for variable expenses is attributable to jet fuel expenses?Explain.
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  • CreatedNovember 19, 2014
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