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 87 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 |
$ |
6,100 |
$ |
471.00 |
$ |
3.20 |
| Advertising |
$ |
2,900 |
|
|
|
|
| Administrative costs |
$ |
6,000 |
$ |
34.00 |
$ |
1.50 |
| Insurance |
$ |
3,800 |
|
|
|
|
|
For example, vessel operating costs should be $6,100 per month plus $471.00 per cruise plus $3.20 per passenger. The company's sales should average $33.00 per passenger. The company's planning budget for July is based on 55 cruises and 3,100 passengers.
Complete the companies planning budget for July
Revenue:
Expenses:
- Vessel operating costs
- Advertising
Administrative costs:
Insurance:
- Total expense
- Net Operating Income