PROBLEM 10-21 Critique a Report; Prepare a Performance Report [LO 10-1, LO 10-4, LO 10-6 TipTop Flight School offers flying lessons at a small municipal airport. The school's owner a manager has been attempting to evaluate performance and control costs using a variance repa that compares the planning budget to actual results. A recent variance report appears below: b Alum1 20 TipTop Flight School Variance Report For the Month Ended July 31 Actual Planning Budget Results Variances 0155 150 Lessons $33,000 $900 F $33,900 Revenue. Expenses: Instructor wages Aircraft depreciation Fuel.... 9,750 5,700 120 U 190 U 9,870 5,890 0,0 2.750 2.250 500 U 120 U Maintenance 2,330 2,450 1,540 3,320 Ground facility expenses. Administration.. 1.550 10 F 70 F 3,390 Total expense 24,970 850 U 25,820 $ 8,080 $50 F $ 8,030 Net operating income 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 variance. The planning budget was developed using the following formulas, where q is the number of lessons sold: Cost Formulas $220q $65q Revenue. Instructor wages Aircraft depreciation $38q $15q $530 +$12q $1,250+$2g $3.240+$1q Fuel..... Maintenance Ground facility expenses. Administration.. Required: Should the owner feel frustrated with the variance reports? Explain. Prepare a flexible budget performance report for the school for July Evaluate the school's performance for July 1. 2. 3. Duformance Renort for a Nonprofit Organization [LO 10-1, LO 10-4, LO 10-6 P10-21 Requirement 1 Write your answer to Requirement 1 below: Requirement 2 Tip Top Flight School Flexible Budget Performance Report For the Month Ended July 31 Revenue and Spending F/U Flexible Budget F/U Planning Budget Activity Variances Actual Results Variances Lessons: (Q) Revenue: ($220Q) Expenses: Instructor Wages: ($65Q) Aircraft Depreciation: ($38Q) Fuel: ($15Q) Maintenance: ($530+$120) S Ground Facility Expenses: ($1250+ $20) Administration: ($3240+$1Q) Total Expenses: Net Operating Income: $ S S Requirement 3 Write your answer to Requirement 3 below