5

Wings Flight School offers flying lessons at a small municipal airport. The schools 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:

Wings Flight School Variance Report For the Month Ended August 31
	Planning Budget		Actual Results		Variances
Lessons		240		250
Revenue	$	51,600	$	53,900	$	2,300	F
Expenses:
Instructor wages		14,640		15,150		510	U
Aircraft depreciation		12,240		12,750		510	U
Fuel		4,800		5,750		950	U
Maintenance		3,770		3,970		200	U
Ground facility expenses		2,810		2,720		90	F
Administration		4,440		4,370		70	F
Total expense		42,700		44,710		2,010	U
Net operating income	$	8,900	$	9,190	$	290	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 August, 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	$215q
Instructor wages	$61q
Aircraft depreciation	$51q
Fuel	$20q
Maintenance	$ 650 + $13q
Ground facility expenses	$1,610 + $5q
Administration	$4,200 + $1q

Required:
	Complete the flexible budget performance report for the school for August. (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.)

Wings Flight School
Flexible Budget Performance Report
For the Month Ended August 31
	Activity Variances		Revenue and Spending Variances
Revenue
Expenses:
Instructor wages
Aircraft depreciation
Fuel
Maintenance
Ground facility expenses
Administration
Total expense
Net operating income