TipTop Flight School offers flying lessons at a small municipal airport. The school's owner and manager has

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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 Static Budget Results Variance Lessons 155 150 $


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 unfavourable variance.

The static budget was developed using the following formulas, where q is the number of lessons sold:

Cost Formulas Revenue Instructor wages Aircraft depreciation Fuel $220q $65q $389 $15q $530 + $12q $1,250 + $2q $3,240 +


Required

1. Should the owner feel frustrated with the variance reports? Explain.

2. Prepare a comprehensive performance report for the school for July.

3. Evaluate the school's performance for July.

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Related Book For  book-img-for-question

Managerial Accounting

ISBN: 9781259275814

11th Canadian Edition

Authors: Ray H Garrison, Alan Webb, Theresa Libby

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