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Canyonland Boat Charter Services rents live aboard houseboats for cruising on the lake that traverses most of the Glen Canyon National recreation area in Southern Utah. The company bases its overhead cost budgets on the following data:
Variable overhead costs:
Cleaning
$72.50 per charter
Maintenance
$56.25 per charter
Park usage fees
$15.75 per charter
Fixed overhead costs:
Salaries and wages
$7,860 per month
Depreciation
$13,400 per month
Utilities
$720 per month
Moorage
$3,670 per month
Each time a boat is chartered whether it is for one day or a week, certain costs must be incurred. Those costs are listed above under the variable overhead costs. For example, each time a boat returns from a charter, it must be thoroughly cleaned, which costs $72.50 on average.
In August, the following actual costs were incurred for 140 charters:
$10,360
$7,630
$2,210
$7,855
$14,450
$735
$3,950
Due to an unanticipated surge in demand for charters, the company purchased a new boat in August to add to its charter fleet.
Construct, a Flexible Budget Performance Report for Canyonland Boat Charter Service for August.
What is apparently the major cause of the total overall overhead variance for the month? Explain.
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