1 ebook 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 Revenue Expenses: 225 220 $ 62,690 $ 61,600 $1,090 F Instructor wages 13,395 13,200 195 U Aircraft depreciation 7,650 7,488 170 U Fuel 4,870 4,180 690 U Maintenance 4,395 4,200 195 U Ground facility expenses 3,180 3,200 20 F Administration 4,250 4,440 190 F Total expense Net operating income 37740 $24,950 36,700 1,100 0 $24,900 $ 50 F After several months of using these 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: Revenue Instructor wages Aircraft depreciation Cost Formulas $2800 5600 $340 $190 $680 $160 Ground facility expenses Administration $2,100 $50 $3,560 $40 Fuel Maintenance 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 (ie., zero variance). Input all amounts as positive values.) 1 Aircraft depreciation Fuel Maintenance $340 $190 $688 $160 Ground facility expenses Administration $2,100 $50 $3,560 $40 Help Save & Exit Submit 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 (.e., zero variance). Input all amounts as positive values.) Tip Top Flight School Flexible Budget Performance Report For the Month Ended July 31 Actual Results Lessons Revenue 225 $62.000 Expenses Instructor wages 13,395 Aircraft depreciation 7.650 Fuel 4,870 Maintenance 4395 Ground facility expenses 3,180 Administration 4,250 Total expense Net operating income $ 24.950 Flexible Budget Planning Budget 220 $ 61,600 13,200 7,400 4,100 4,200 3,200 4,440 36.700 37,740 $ 24.900