Please with the particular solving process. 3. Prepare a Flexible Budget with Mo

Question

Please with the particular solving process. 3. Prepare a Flexible Budget with More Than One Cost Driver Icicle Bay Tours operates day tours of coastal glaciers in Alaska on its tour boat the Emerald Glacier. Management has identified two cost drivers-the number of cruises and 3 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 Cost per Cost per Per Month Cruise Passenger RM6,800 RM 475.00 RM3.50 RM2,700 RM5,800 RM 36.00 RM1.80 RM3,600 Vessel operating costs Administrative costs Insurance For example, vessel operating costs should be RM6,800 per month plus RM475.00 per cruise plus RM3.50 per

Explanation / Answer

Planning budget for August Number of cruises (a) 58 Number of passengers (b) 3200 Revenue (28*b) 89600 Expenses: Vessel operating costs 6800+(475*a)+(3.50*b) 45550 Advertising 2700 Administrative costs 5800+(36*a)+(1.80*b) 13648 Insurance 3600 Total expenses 65498 Net operating income 24102

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