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: TipTop Flight School Variance Report For the Month Ended July 31 Actual Results Planning Budget Variances Lessons 190 185 Revenue $ 45,450 $ 44,400 $ 1,050 F Expenses: Instructor wages 12,180 12,025 155 U Aircraft depreciation 7,410 7,215 195 U Fuel 3,425 2,775 650 U Maintenance 3,015 2,860 155 U Ground facility expenses 2,925 3,010 85 F Administration 4,295 4,405 110 F Total expense 33,250 32,290 960 U Net operating income $ 12,200 $ 12,110 $ 90 F 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: Cost Formulas Revenue $240q Instructor wages $65q Aircraft depreciation $39q Fuel $15q Maintenance $640 + $12q Ground facility expenses $1,900 + $6q Administration $3,480 + $5q 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.) Next Visit question mapQuestion 2 of 5 Total 2 of 5 Prev

Explanation / Answer

Actual Revenue and spending variances Flexible budget Activity variances Planning budget Lessons 190 190 185 Revenue 45450 150 U 45600 1200 F 44400 Expenses: Instructor wages 12180 170 F 12350 325 U 12025 Aircraft depreciation 7410 0 None 7410 195 U 7215 Fuel 3425 575 U 2850 75 U 2775 Maintenance 3015 95 U 2920 60 U 2860 Ground facility expenses 2925 115 F 3040 30 U 3010 Administration 4295 135 F 4430 25 U 4405 Total expense 33250 250 U 33000 710 U 32290 Net operating income 12200 400 U 12600 490 F 12110

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