Billafuerte 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 uses the following data in its budgeting:
In July, the company budgeted for 496 guests and 233 jeeps. The actual activity for the month was 481 guests and 238 jeeps.Required:Prepare the company's planning budget for July.
Definitions:
Direct Method
A cost allocation method used in cost accounting that directly assigns all direct costs to specific cost objects, such as products or services, without using any allocation for indirect costs.
Service Department
A department within a company that provides essential support services to the production and sales departments, not directly generating revenue.
Assembly Department
A section within a manufacturing facility where components are assembled into final products.
Employee Hours
The total number of hours worked by employees, often used for tracking labor costs, productivity, or workforce planning.
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