Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Chapter 9, Problem 5E
To determine
Concept Introduction:
Flexible Budget: The budget made to recognize the difference between fixed, semi-variable, and variable costs in accordance with the change in the level of activity attained is stated as a flexible budget. In order to prepare flexible costs, the first essential step is to segregate the cost into three categories; fixed costs, semi-variable, and variable costs. Fixed cost remains the same irrespective of the activity level. Variable cost and semi-variable changes as per the change in the activity level.
To Prepare: The flexible budget for the A Tours.
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Exercise 9-3 (Static) 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 drivers—the number of cruises and the number of passengers—that 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 80 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below:
Fixed Cost per Month
Cost per Cruise
Cost per Passenger
Vessel operating costs
$ 5,200
$ 480.00
$ 2.00
Advertising
$ 1,700
Administrative costs
$ 4,300
$ 24.00
$ 1.00
Insurance
$ 2,900
For example, vessel operating costs should be $5,200 per month plus $480 per cruise plus $2 per passenger. The company’s sales should average $25 per passenger. In July, the company provided 24 cruises for a…
Exercise 9-3 (Algo) 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 drivers-the number of cruises and the number of
passengers-that 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
company's cost formulas appear below:
Vessel operating costs
Advertising
Administrative costs
Insurance
Fixed Cost per
Month
Cost per
Passenger
$ 3.50
$ 6,800
Cost per
Cruise
$ 479.00
$ 2,200
$ 5,700
$ 3,800
$ 30.00
$ 1.50
For example, vessel operating costs should be $6,800 per month plus $479.00 per cruise
plus $3.50 per passenger. The company's sales should average $33.00 per passenger. In
July, the company provided 53 cruises for a total of 3,050 passengers.…
TB Problem Qu. 9-401 (Algo) Cryan Jeep Tours operates jeep tours...
Cryan Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases its budgets on two measures of
activity (i.e., cost drivers), namely guests and jeeps. One vehicle used in one tour on one day counts as a jeep. Each jeep has one tour
guide. The company uses the following data in its budgeting:
Actual guests
Actual jeeps
Revenue
Expenses:
Revenue
Tour guide wages.
Vehicle expenses.
Administrative expenses
In May, the company budgeted for 497 guests and 202 jeeps. The company's income statement showing the actual results for the
month appears below:
Cryan Jeep Tours
Income Statement
For the Month Ended May 31
Tour guide wages
Vehicle expenses
Administrative expenses
Total expense
Net operating income
Guests
Jeeps
Revenue
Expenses:
Fixed element
per month
$0
$0
Tour guide wages
Vehicle expenses
Administrative expenses
Total expense
Net operating income
$ 5,600
$ 2,100
512
197
$ 87,854
Required:…
Chapter 9 Solutions
Managerial Accounting
Ch. 9 - Prob. 1QCh. 9 - What is a flexible budget and how does it differ...Ch. 9 - Prob. 3QCh. 9 - Why is it difficult to interpret a difference...Ch. 9 - What is an activity variance and what does it...Ch. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - Prob. 9QCh. 9 - Prob. 10Q
Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 2F15Ch. 9 - Prob. 3F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 -
L09-1, LO9-2, LO9-3
Adger Corporation is a...Ch. 9 - Prob. 8F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 10F15Ch. 9 - Prob. 11F15Ch. 9 - Prob. 12F15Ch. 9 - Prob. 13F15Ch. 9 - Prob. 14F15Ch. 9 - Prob. 15F15Ch. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 -
EXERCISE 9-3 Revenue and Spending Variances...Ch. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24CCh. 9 - Prob. 25CCh. 9 - Prob. 26C
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