Otomo 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: Fixed element
per month Variable element
per guest Variable element per jeep
Revenue $ 0 $ 83 $ 0
Tour guide wages $ 0 $ 0 $ 103
Vehicle expenses $ 3,300 $ 7 $ 53
Administrative expenses $ 1,400 $ 1 $ 0
In July, the company budgeted for 353 guests and 123 jeeps. The company's income statement showing the actual results for the month appears below:
Otomo Jeep Tours
Income Statement
For the Month Ended July 31
Actual guests 346
Actual jeeps 125
Revenue $ 28,658
Expenses:
Tour guide wages 12,625
Vehicle expenses 12,467
Administrative expenses 1,746
Total expense 26,838
Net operating income 1,820
Required:
Prepare a report showing the company's activity variances for July. Label each variance as favorable (F) or unfavorable (U). (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.)
Otomo Jeep Tours
Activity Variances
For the Month Ended July 31
Flexible Budget Planning Budget Activity Variances
Guests 346 353
Jeeps 125 123
Revenue
Expenses:
Tour guide wages
Vehicle expenses
Administrative expenses
Total expense
Net operating income