Exercise 8-3 Prepare a Flexible Budget with More Than One Cost Driver [LO8-3]

Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost driversthe number of cruises and the number of passengersthat it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 83 passengers can be accommodated on the tour boat. Data concerning the companys cost formulas appear below:

	Fixed Cost Per Month		Cost per Cruise		Cost per Passenger
Vessel operating costs	$	6,100	$	470.00	$	3.40
Advertising	$	2,800
Administrative costs	$	5,400	$	37.00	$	1.50
Insurance	$	3,700

For example, vessel operating costs should be $6,100 per month plus $470.00 per cruise plus $3.40 per passenger. The companys sales should average $30.00 per passenger. The companys planning budget for July is based on 53 cruises and 3,050 passengers.

Required:

Complete the companys planning budget for July.

Alyeski Tours
Planning Budget
For the Month Ended July 31
Revenue
Expenses:
Vessel operating costs
Advertising
Administrative costs
Insurance
Total expense	0
Net operating income	$0