AirQual Test Corporation provides on-site air quality testing services

EXERCISE 10–16 Flexible Budget Performance Report

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following data concerning its operations:

Fixed component Variable component Actual Per month per job total for February

Revenue . . . . . . . . . . . . . . . . . . . . . $360 $18950
Technician wages . . . . . . . . . . . . . $ 4600 $6 450
Mobile lab operating expenses . . . $ 2900 $35 $4530
Office expenses . . . . . . . . . . . . . . $2600 $2 $3 050
Advertising expenses . . . . . . . . . . $ 970 $995
Insurance . . . . . . . . . . . . . . . . . . $1680 $1680
Miscellaneous expenses . . . . . . . $ 500 $3 $465

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $2,900 plus $35 per job, and the actual mobile lab operating expenses for February was $4,530. The company expected to work 50 jobs in February, but actually worked 52 jobs.

Required:
Prepare a flexible budget performance report showing Air Qual Test Corporation’s activity variances and revenue and spending variances for February.

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Southwest Blue Airways provides air transportation services between Seattle and San Diego

Southwest Blue Airways provides air transportation services between Seattle and San Diego. A single Seattle to San Diego round-trip flight has the following operating statistics:

Fuel $7000
Flight Crew Salaries $5400
Airplane depriciation $2600
Variable cost per business class ticket $ 50
Variable cost pereconomy class ticket $ 40
Round trip ticket business class $ 550
Round trip ticket economy class $ 290

It is assumed that the fuel, crew salaries, and airplane depreciation are fixed, regardless of the number of seats sold for the round-trip flight.

a. Compute the break-even number of seats sold on a single round-trip flight for the overall product. Assume that the overall product is 20% business class and 80% economy class tickets.
b. How many business class and economy class seats would be sold at the break-even point?

Click here for the solution: Southwest Blue Airways provides air transportation services between Seattle and San Diego