TipTop Flight School offers flying lessons at a small municipal airport. The sch
ID: 2413149 • Letter: T
Question
TipTop Flight School offers flying lessons at a small municipal airport. The school’s owner and manager has been attempting to evaluate performance and control costs using a variance report that compares the planning budget to actual results. A recent variance report appears below:
After several months of using such variance reports, the owner has become frustrated. For example, she is quite confident that instructor wages were very tightly controlled in July, but the report shows an unfavorable variance.
The planning budget was developed using the following formulas, where q is the number of lessons sold:
Required:
2. Complete the flexible budget performance report for the school for July. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
TipTop Flight SchoolVariance Report
For the Month Ended July 31 Actual
Results Planning
Budget Variances Lessons 205 200 Revenue $ 41,920 $ 41,000 $ 920 F Expenses: Instructor wages 13,190 13,000 190 U Aircraft depreciation 7,790 7,600 190 U Fuel 4,070 3,600 470 U Maintenance 2,990 2,860 130 U Ground facility expenses 2,530 2,630 100 F Administration 4,305 4,400 95 F Total expense 34,875 34,090 785 U Net operating income $ 7,045 $ 6,910 $ 135 F
Explanation / Answer
Answers
TipTop Flight School
Flexible Budget Performance Report
For the Month Ended July 31
Actual
Flexible
Variance
Results
Budget
Difference
F/U/None
[A]
[B]
[C = A – B]
Lessons
205
205
Revenue
$ 41,920.00
$ 42,025.00
$ 105.00
U
Expenses:
Instructor wages
$ 13,190.00
$ 13,325.00
$ 135.00
F
Aircraft depreciation
$ 7,790.00
$ 7,790.00
$ -
N
Fuel
$ 4,070.00
$ 3,690.00
$ 380.00
U
Maintenance
$ 2,990.00
$ 2,915.00
$ 75.00
U
Ground facility expenses
$ 2,530.00
$ 2,655.00
$ 125.00
F
Administration
$ 4,305.00
$ 4,405.00
$ 100.00
F
Total expense
$ 34,875.00
$ 34,780.00
$ 95.00
U
Net operating income
$ 7,045.00
$ 7,245.00
$ 200.00
U
Working for above:
TipTop Flight School
Flexible Budget Performance Report
For the Month Ended July 31
Actual
Flexible
Results
Budget
Lessons
205
205
Revenue
41920 (A)
=205*205 (A)
Expenses:
Instructor wages
13190
=205*65
Aircraft depreciation
7790
=205*38
Fuel
4070
=205*18
Maintenance
2990
=660+(205*11)
Ground facility expenses
2530
=1630+(205*5)
Administration
4305
=4200+(205*1)
Total expense
TOTAL (B)
TOTAL (B)
Net operating income
(A – B)
(A – B)
TipTop Flight School
Flexible Budget Performance Report
For the Month Ended July 31
Actual
Flexible
Variance
Results
Budget
Difference
F/U/None
[A]
[B]
[C = A – B]
Lessons
205
205
Revenue
$ 41,920.00
$ 42,025.00
$ 105.00
U
Expenses:
Instructor wages
$ 13,190.00
$ 13,325.00
$ 135.00
F
Aircraft depreciation
$ 7,790.00
$ 7,790.00
$ -
N
Fuel
$ 4,070.00
$ 3,690.00
$ 380.00
U
Maintenance
$ 2,990.00
$ 2,915.00
$ 75.00
U
Ground facility expenses
$ 2,530.00
$ 2,655.00
$ 125.00
F
Administration
$ 4,305.00
$ 4,405.00
$ 100.00
F
Total expense
$ 34,875.00
$ 34,780.00
$ 95.00
U
Net operating income
$ 7,045.00
$ 7,245.00
$ 200.00
U
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