Problem - Tervo 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 has provided the following report for March:
|
|
|
|
|
Plan
|
Actual
|
|
Guest
|
|
|
|
492
|
497
|
|
Jeeps
|
|
|
|
165
|
163
|
|
|
Fixed
|
Variable per guest
|
Variable per jeep
|
|
|
|
Revenue
|
$ -
|
$101
|
$ -
|
49,692
|
49,067
|
|
Expenses:
|
|
|
|
-
|
|
|
Tour guide wages
|
$-
|
$ -
|
$136
|
22,440
|
21,858
|
|
Vehicle expenses
|
$4,900
|
$8
|
$57
|
18,241
|
17,917
|
|
Administrative expenses
|
$1,000
|
$2
|
$ -
|
1,984
|
2,014
|
|
Total expense
|
|
|
|
42,665
|
41,789
|
|
Net Operating Income
|
|
|
|
7,027
|
7,278
|
Required: Prepare the company's flexible budget performance report for March. Label each variance as favorable (F) or unfavorable (U).