Vulcan Flyovers offers scenic overflights of Mount Saint Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company's operations in July appear below: Vulcan Flyovers Operating Data For the Month Ended July 31 Flights (q) Revenue ($340.00q) Expenses: Wages and salaries ($3,500+ $88.00q) Fuel ($32.009) Airport fees ($820 + $33.00q) Aircraft depreciation ($10.00q). Office expenses ($210+ $1.009) Total expense Net operating income Actual Results 54 $ 16,500 8,216 1,894 2,462 540 432 13,544 $ 2,956 Flexible. Budget 54 $18,360 8,252 1,728 2,602 540 264 13,386 $ 4,974 Planning Budget 52 $ 17,680 8,076 1,664 2,536 520 262 13,058 $ 4,622 The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount. Required: 1. Prepare a flexible budget performance report for July that includes revenue and spending variance and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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