School offers flying lessons at a small municipal airport. The schools owner and manager attempted to evaluate performance and control costs using a variance report comparing the planning budget to actual results. A recent variance report appears below.

Flight School

Variance Report

For the Month ended July 31

	Actual Results	Planning Budget	Variances
Lessons	200	195
Revenue	$49,810	$48,750	$1,060 F
Expenses:
Instructor wages	13,815	13,650	165 U
Aircraft depreciation	8,000	7,800	200 U
Fuel	3,780	3,120	660 U
Maintenance	3,350	3,185	165 U
Ground Facility expenses	2,250	2,340	90 F
Administration	3,575	3,695	120 F
Total Expenses	34,770	33,790	980 U
Net operating income	$15,040	$14,960	$80 F

After several months using these reports the owner has become frustrated. For example, she is a confident instructor wages were tightly controlled in July, but the reports show an unfavorable variance.

She developed the planning budget using the following formulas where q is the number of lessons sold.

	Cost Formulas
Revenue	$250 q
Instructor wages	$70 q
Aircraft depreciation	$40 q
Fuel	$16 q
Maintenance	$650 +13 q
Ground facility expenses	$1,950 + $2 q
Administration	$3,500 + $1 q

Required:

Complete the flexible budget performance report for the school for July.

Note: 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.

School

Flexible Budget Performance Report

For the Month Ended July 31

Actual results

Revenue and

Spending Variances

Flexible Budget

Activity Variances

Planning Budget

Lessons

200

195

Revenue

$49,810

$48,750

Expenses:

Instructor wages

13,815

13,650

Aircraft depreciation

8,000

7,800

Fuel

3,780

3,120

Maintenance

3,350

3,185

Ground facility expenses

2,250

2,340

Administration

3,575

3,695

Total expenses

34,770

33,790

Net operating Income

$15,040

$14,960