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).)

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:

Explanation / Answer

Actual Flexible Variance Results Budget lessons 165 165 Revenue 35,360 35475 115 U Expenses: Instructor Wages 10,550 10725 175 F Aircraft Depreciation 5,940 5940 0 Fuel 3,470 3135 335 U Maintenance 2,510 2465 45 U Ground facility expense 2,205 2290 85 F Administration 4,280 4335 55 F total expense 28,955 28890 65 U Net operating income 6,405 6585 180 U

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