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

Question

TipTop Flight School offers flying lessons at a small municipal airport. The company has recently recognized the need to implement more formal accounting procedures for control purposes. Toward this end, the company recently hired a young graduate, Tim Owens, to perform accounting services on an as-needed basis. Diane Westfallen, the company's owner, recently requested that Owens prepare a report that she can use to assess how well the company controlled its operating costs during November 2015. Owens gathered the following November data from the accounting information system (number of flying lessons was the activity measure used for separating variable and fixed costs):Prepare a performance (i.e.. responsibility) report, in good form, that Ms. Westfallen can use to assess how well the company controlled its operating costs during November 2015. In preparing the report, use the style guidelines for accounting reports (regarding, for example, headings, rulings, dollars signs, line-item labels) that arc posted on the course website and have been discussed in class. Provide complete, systematic, and neat documentation of all required computations on a page that is separate from the body of the report. No credit will be given for figures requiring computations unless adequate documentation of those computations is displayed within the quiz solution. Prepare the solution, including supporting computations, with cither computer spreadsheet software or word-processing software. Use at least one-inch margins, a 10-point font, and a portrait orientation. Copying any portion of another person's computer file is cheating. If you use spreadsheet software, set the print range so that the formatting of the printed hard copy of your solution complies with the above requirements.

Explanation / Answer

Working Note

Calculation of Standard Cost Per Unit

Particulars Actual Result Spending Variance Flexible Budget: (165*Standard Cost) Activity Variance Planning Budget Lessons 165 165 150 Variable Operating costs Fuel $2,375 $100 $2,475 -$225 $2,250 Aircraft Maintenance $1,900 $80 $1,980 -$180 $1,800 Aircraft Depreciation $6,500 -$230 $6,270 -$570 $5,700 Instructor Wages $10,725 $0 $10,725 -$975 $9,750 Ground Facility Costs $310 $20 $330 -$30 $300 Administration $190 -$25 $165 -$15 $150 Total Variable Operating costs $22,000 -$55 $21,945 -$1,995 $19,950 Fixed Operating Costs Aircraft Maintenance $750 -$167 $583 -$53 $530 Ground Facility Costs $1,100 $275 $1,375 -$125 $1,250 Administration $3,400 $164 $3,564 -$324 $3,240 Total Fixed Operating Costs $5,250 $272 $5,522 -$502 $5,020 Total Operating costs $27,250 $217 $27,467 -$2,497 $24,970

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