Problem 9-22 Critique a Report; Prepare a Performance Report (LO9-1, LO9-2, LO9-3, LO9-4, LO9-6) 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 Planning Results Budget 225 220 Variances Lessons $ 62,690 $ 61,600 $1,090 F Revenue Expenses : Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income 13,395 13,200 195 U 7,650 7,480 170 U 4,870 4,180 690 V 4,395 4,200 195 U 3,180 3,200 20 F 4,250 4,440 190 F 37,740 36,700 1,100 U $ 24,950 $ 24,900 $ 50 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 July, but the report shows an unfavorable variance. The planning budget was developed using the following formulas, where is the number of lessons sold: Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Cost Formulas $2809 $609 $349 $199 $680 + $ 169 $2,100 + $59 $3,560 + $49 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 (i.e., zero variance). Input all amounts as positive values.) TipTop Flight School Flexible Budget Performance Report For the Month Ended July 31 Actual Results Flexible Budget Planning Budget 220 Lessons 225 Revenue $ 62,690 $ 61,600 Expenses: Instructor wages $ 13,395 13,200 Aircraft depreciation 7,650 7,480 4,180 Fuel 4,870 Maintenance 4,395 4,200 Ground facility expenses 3,180 3,200 Administration 4,250 4,440 Total expense 37,740 36,700 Net operating income $ 24,950 $ 24,900