1 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: 140 TipTop Flight School Variance Report For the Month Inded July 31 Actual Planning Results Budget Variances Lessons 145 Revenue 533, 110 $ 32,200 $ 910 Expenses: Instructor wages 3,510 8,400 1100 Aircraft depreciation 4,350 4,200 150 U Fuel 2.470 1.960 510 U Maintenance 2,010 1.900 110 Ground facility expenses 1. 465 1,480 15 T Administration 3,265 3.340 25 F Total expense 22,070 21200 790 U Not operating income $ 11,040 $ 10,920 $ 120 T 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 is the number of lessons sold: Cost Formula Revenue $2300 Instructor wages $609 Aircraft depreciation $309 Puel $149 Maintenance $500 + $109 Ground facility expenses $1,200 + $29 Administration $3,200 + $10 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.) Title The planning budget was developed using the following formulas, where is the number of lessons sold: 1 Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Cost Formulas $2300 $609 $309 $149 $500 + $109 $1,200 + $29 $3,200 + $19 Required: 2. Complete the flexible budget performance report for the school for July. (Indicate the effect of each variance by selecting "P" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) TipTop Flight School Flexible Budget Performance Report For the Month Ended July 31 Actual Flexible Results Budget 145 Planning Budget 140 Lessons Revenue $ 33.110 $ 32,200 Expenses: Instructor wages 8,510 8,400 Aircraft depreciation 4,350 4.200 Fuel 1.960 1,900 Maintenance Ground facility expenses Administration Total expense Net operating income 2.470 2,010 1,465 3,265 22,070 $ 11,040 1,480 3,340 21,280 $ 10.920