Vulcan Flyovers offers scenic over flights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company's operations in July appear below:

The company measures its activity in terms of flights. Customers can buy individual tickets for over flights or hire an entire plane for an over flight at a discount.
Required:
1. Using Exhibit 9-8 as your guide, prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances.
Exhibit 9 - 8: Performance Report Combining Activity Variances with Revenue and Spending Variances

2. Which of the variances should be of concern to management? Explain.

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Vulcan Flyovers Operating Data For the Month Ended July 31 Actual Results Flexible Planning Budget 50 13,650 $15,360 $16,000 Budget Flights (q) Revenue ($320.00q) Expenses: 48 48 Wages and salaries ($4,000$82.00q) Fuel ($23.00q) Airport fees ($650$38.00q) Aircraft depreciation ($7.00q) Office expenses ($190$2.00q) 8,430 1,260 2,350 336 460 12,836 7,936 1,104 2,474 336 286 12,136 $ 814 3.224 8.100 1,150 2,550 350 290 12,440 $ 3,560 Total expense Net operating income Rick's Halrstyling Flexible Budget Performance Report For the Month Ended March 31 Revenue and Spending Varlances Activity Actual Results Flexible Varlances Planning (1)-(2) Budget (2)- (3) Budget Client-visits Revenue ($180.00q) Expenses: 1,000 . $194,200 $3,800U $198,000 $18,000 F $180,000 1,100 1,100 Wages and salaries ($65,000+$37.00g) Halrstyling supplles ($1.50q) Client gratultles ($4.10q) Electricity ($1,500+$0.10q) Rent ($28,500) Liablity Insurance ($2,800) Employee health Insurance ($21,300) Miscellaneous ($1,200$0.20q) 106,900 ,200 U 105,700 3,700 U102,000 1,500 4,100 1,600 28,500 2,800 21,300 1,400 4,290 U 163,200 30,510 $13,710 F 16,800 1,620 6,870 1,550 28,500 2,800 22,600 2,130 172,970 1.650 4,510 1,610 28,500 2,800 1,300 U 21,300 1,420 5.480 U 167.490 30 F 150 U 410 U 10 U 2,360 U 60 F 0 0 0 0 0 710 U 20 U Total expense Net operating Income $ 21,230 9,280 U