Exercise 9-3 Prepare a Flexible Budget with More Than One Cost Driver [LO9-3]

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 88 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		$	476.00		$	3.30
Advertising	$	2,300
Administrative costs	$	5,700		$	31.00		$	1.50
Insurance	$	3,600

For example, vessel operating costs should be $6,100 per month plus $476.00 per cruise plus $3.30 per passenger. The companys sales should average $34.00 per passenger. In July, the company provided 57 cruises for a total of 3,050 passengers.

Required:

Prepare the companys flexible budget for July.

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