Q5

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 Variances Lessons 145 140 Revenue $ 36,030 35,000 $1,030 F Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration 135 U 185 U 630 U 135 U 75 F 95 F 915 U 10,495 $10,380 $ 115F 7,835 5,365 3,430 3,135 2,145 3,625 25,535 7,700 5,180 2,800 3,000 2,220 3,720 Total expense Net operating income 595324,620 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 Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration $250q $55q $37q $20g $620 $17q $1,800 $3q $3,440$2q 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.) Tip Top Flight School Flexible Budget Performance Report For the Month Ended July 31 Actual Results Flexible Budget Planning Budget Lessons 145 140 Revenue $ 36,030 $ 35,000 Expenses Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration $ 7,835 5,365 3,430 3,135 2,145 3,625 25,535 $ 10,495 7,700 5,180 2,800 3,000 2,220 3,720 24,620 $ 10,380 Total expense Net operating income