Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management Identifiedtwo cost drivers for budgeting purposes-the number of cruises and the number of passengers. The companypublishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 85passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below:Vessel operatingcostsAdvertisingFixedCostCostper per Cost perMonth Cruise Passenger$$ 3.306,000 470.00$$2,400Administrative$$$ 1.50costs5,700 35.00Insurance$3,700For example, vessel operating costs should be $6,000 per month plus $470.00 per cruise plus $3.30 per passenger.The company's sales should average $28.00 per passenger. In July, the company provided 53 cruises for a total of3,200 passengers.Required:Prepare the company's flexible budget for July.Alyeski ToursFlexible BudgetFor the Month Ended July 31RevenueExpenses:Vessel operating costsAdvertisingAdministrative costsInsuranceTotal expenses0Net operating income$0

A flexible budget predicts how the revenues and expenses will change in response to changes in the…

Answered: Alyeski Tours operates day tours of…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 4CMA: Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold...

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Novo, Inc., wants to develop an activity flexible budget for the activity of moving materials. Novo uses eight forklifts to move materials from receiving to stores. The forklifts are also used to move materials from stores to the production area. The forklifts are obtained through an operating lease that costs 18,000 per year per forklift. Novo employs 25 forklift operators who receive an average salary of 50,000 per year, including benefits. Each move requires the use of a crate. The crates are used to store the parts and are emptied only when used in production. Crates are disposed of after one cycle (two moves), where a cycle is defined as a move from receiving to stores to production. Each crate costs 1.80. Fuel for a forklift costs 3.60 per gallon. A gallon of gas is used every 20 moves. Forklifts can make three moves per hour and are available for 280 days per year, 24 hours per day (the remaining time is downtime for various reasons). Each operator works 40 hours per week and 50 weeks per year. Required: 1. Prepare a flexible budget for the activity of moving materials, using the number of cycles as the activity driver. 2. Calculate the activity capacity for moving materials. Suppose Novo works at 80 percent of activity capacity and incurs the following costs: Prepare the budget for the 80 percent level and then prepare a performance report for the moving materials activity. 3. Calculate and interpret the volume variance for moving materials. 4. Suppose that a redesign of the plant layout reduces the demand for moving materials to one-third of the original capacity. What would be the budget formula for this new activity level? What is the budgeted cost for this new activity level? Has activity performance improved? How does this activity performance evaluation differ from that described in Requirement 2? Explain.
AirBorne is a small airline operating out of Boise, Idaho. Its three flights travel to Salt Lake City, Reno, and Portland. The owner of the airline wants to assess the full cost of operating each flight. As part of this assessment, the costs of two support departments (maintenance and baggage) must be allocated to the three flights. The two support departments that support all three flights are located in Boise (any maintenance or baggage costs at the destination airports are directly traceable to the individual flights). Budgeted and actual data for the year are as follows for the support departments and the three flights: Round all allocation ratios and variable rates to four significant digits. Round all allocated amounts to the nearest dollar. Required: 1. Using the direct method, allocate the support service costs to each flight, assuming that the objective is to determine the cost of operating each flight. 2. Using the direct method, allocate the support service costs to each flight, assuming that the objective is to evaluate performance. Do any costs remain in the two support departments after the allocation? If so, how much? Explain.
Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold through specialty golf shops. The company is in the process of developing itsoperating budget for the coming year. Selected data regarding the companys two products areas follows: Manufacturing overhead is applied to units using direct labor hours. Variable manufacturing overhead Ls projected to be 25,000, and fixed manufacturing overhead is expected to be15,000. The estimated cost to produce one unit of the laminated putter head is: a. 42. b. 46. c. 52. d. 62.
Product costing and decision analysis for a service company Blue Star Airline provides passenger airline service, using small jets. The airline connects four major cities: Charlotte, Pittsburgh, Detroit, and San Francisco. The company expects to fly 170,000 miles during a month. The following costs are budgeted for a month: Blue Star management wishes to assign these costs to individual flights in order to gauge the profitability of its service offerings. The following activity bases were identified with the budgeted costs: The size of the companys ground operation in each city is determined by the size of the workforce. The following monthly data are available from corporate records for each terminal operation: Three recent representative flights have been selected for the profitability study. Their characteristics are as follows: Instructions Determine the fuel, crew, and depreciation cost per mile flown. Determine the cost per arrival or departure by terminal city. Use the information in (1) and (2) to construct a profitability report for the three flights. Each flight has a single arrival and departure to its origin and destination city pairs.
Haysbert Company provides management services for apartments and rental units. In general, Haysbert packages its services into two groups: basic and complete. The basic package includes advertising vacant units, showing potential renters through them, and collecting monthly rent and remitting it to the owner. The complete package adds maintenance of units and bookkeeping to the basic package. Packages are priced on a per-rental unit basis. Actual results from last year are as follows: Haysbert had budgeted the following amounts: Required: 1. Calculate the contribution margin variance. 2. Calculate the contribution margin volume variance. 3. Calculate the sales mix variance.
Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing cost information for the next year: If Adam uses the step-down (sequential) method, beginning with the Maintenance Department, to allocate support department costs to production departments, the total overhead (rounded to the nearest dollar) for the Machining Department to allocate to its products would be: a. 407,500. b. 422,750. c. 442,053. d. 445,000.
A local picnic table manufacturer has budgeted the following overhead costs: They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown: Recent success has yielded an order for 1,500 tables. Determine how much the job would cost given the following activities, and assuming an hourly rate for direct labor of $25 per hour:
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 salings I if there is sufficient demand. Up to 82 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 $ 6, 600 S 473.00 $ 3.00 Advertising S 3,000 Administrative costs $ 6,000 S 37.00 $ 1.50 Insurance S-3,300 For example, vessel operating costs should be $6, 600 per month plus $473.00 per cruise plus $3.00 per passenger. The company's sales should average $32.00 per passenger. In July, the company provided 50 cruises for a total of 3, 050 passengers. Required: Prepare the company's flexible budget for July.
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 total of 1,400 passengers. Required: Prepare the…
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 81 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 $ 6,300 $ 478.00 $ 3.40 Advertising $ 2,700 Administrative costs $ 5,500 $ 33.00 $ 1.50 Insurance $ 3,800 For example, vessel operating costs should be $6,300 per month plus $478.00 per cruise plus $3.40 per passenger. The company’s sales should average $29.00 per passenger. In July, the company provided 59 cruises for a total of 3,100 passengers. Required: Prepare…
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 86 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below: Fixed Costper Month Cost perCruise Cost perPassenger Vessel operating costs $ 6,200 $ 479.00 $ 3.20 Advertising $ 2,700 Administrative costs $ 5,400 $ 35.00 $ 1.50 Insurance $ 3,300 For example, vessel operating costs should be $6,200 per month plus $479.00 per cruise plus $3.20 per passenger. The company’s sales should average $30.00 per passenger. The company’s planning budget for July is based on 59 cruises and 3,000 passengers. Required: Complete the…
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 85 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 $ 6,400 $ 478.00 $ 3.50 Advertising $ 2,900 Administrative costs $ 5,100 $ 40.00 $ 1.50 Insurance $ 3,600 For example, vessel operating costs should be $6,400 per month plus $478.00 per cruise plus $3.50 per passenger. The company’s sales should average $32.00 per passenger. In July, the company provided 58 cruises for a total of 3,150 passengers. Required: Prepare…

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