TipTop Flight School offers flying lessons at a small municipal airport. The sch

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: 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).)

Explanation / Answer

TipTop Flight School Flexible Budget Performance Report      For the month Ended July 31           Revenue and Spending Variances Actual Results Flexible Budget Variance Lesson 195 195 Revenue 39870 39975 105 U Expenses       Instructor wages 11960 12090 130 F       Aircraft depriciation 7020 7020 0 None        Fuel 4050 3705 345 U        Maintenance 2700 2620 80 U         Ground facility expenses 2515 2605 90 F         Administration 4335 4405 70 F Total expenses 32580 32445 135 U Net operating income 7290 7530 240 U

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