Consider the performance (in thousands of dollars) of Economy Airlines
for a given year.

The master budget had been based on a budget of $.20 per revenue
passenger kilometre.  A revenue passenger kilometre is one paying
passenger who has flown one kilometre.  An average airfare decrease of
8 % helped to generate an increase in passenger kilometeres flown that
exceeded the master budget for the year by 10%.

The price per litre of jet fuel rose above the price used to formulate
the mster budget.  The average price increase for the year was 12%.


	            Actual Results			
	           At actual prices	  Master Budget	 Variance
Revenue		        $  ?	         $300,000       $   ?
Variable expense	  200,000	  195,000*	  5,000U
Contribution margin	   ?	          105,000	    ?
Fixed expense	           77,000	   75,000	  2,000U
Operating income	   ?	        $  30,000	    ?
*includes the $90,000 cost of jet fuel


1.)  Prepare a summary perfromance report for the president using the
following report.

2,)  Assume that jet fuel costs are purely variable and the use of
fuel was at the same level of efficiency as predicted in the same
budget.  What portion of the flexible-budget variance for variable
expense is attributable to jet fuel expenses? Explain.

	           Acutal Results  Flexible   Flexible   Sales     Master
                     at Actual      Budget     Budget   Volume      Buget 
                       Prices      Variances            Variances
Revenue		        
Variable expense	  
Contribution margin	   
Fixed expense	           
Operating income