Problem 9-21 Critique a Report; Prepare a Performance Report LO9-1, LO9-4, LO9-6

Question

Problem 9-21 Critique a Report; Prepare a Performance Report LO9-1, LO9-4, LO9-6] TipTop Flight School offers fying lessons at a smaill municipal airport. The schoors 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 varianoe report appears below TipTop Flight School Variance Report For the Month Ended July 31 Actual Planning ResultsBudget Variances 195 190 Lessons Revenue 543,740 42,750 5990 F Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses 12,320 2,160 160 U 7,410 195 U 3,420 450 U 2,940 140 U 2,370 65 F 4,380 75 F 7,805 3,870 3,080 2,305 4,305 Total expense 33,485 32,680 805 U Net operating income S10,255 10,070 5185 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 anance The planning budget was developed using the following formulas, where q is the number of lessons sold: Cost Formulas 225q 584g 539q 518q S660 $12q $1,610 $4g S4,190 $1g Revenue Instructor wages ircraft depreciation Maintenance Ground facility expenses Administration

Explanation / Answer

FLEXIBLE BUDGET PERFORMANCE REPORT Actual Results Revenue and Spending Variances Flexible Budget Activity Variances Planning Budget Lessons (q) 195 195 190 Revenue 43740 135 F 43875 1125 F 42750 Expenses: Instructor wages 12320 160 U 12480 320 U 12160 Aircraft depreciation 7605 0 N 7605 195 U 7410 Fuel 3870 360 F 3510 90 U 3420 Maintenance 3080 80 F 3000 60 U 2940 Ground facility expenses 2305 85 U 2390 20 U 2370 Administration 4305 80 U 4385 5 U 4380 Total expenses 33485 115 F 33370 690 U 32680 Net operating income 10255 250 F 10505 435 F 10070

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.