spending variances

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 Resulta Budget Variances Lessons 155 150 Revenue $ 36,970 $ 36,000 S 970 F Expenses Instructor wages 9,920 9,750 170 0 Aircraft depreciation 4,805 4,650 155 U Fuel 3,270 2,700 570 U Maintenance 2,530 2,360 170 0 Ground facility expenses 2, 205 2,250 45 F Administration 3,815 3,920 Total expense 26,545 25.630 915 U Net operating income $ 10,425 $ 10,370 $ 55 F 105 After several months of using these 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 g is the number of lessons sold: Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Cost Formulas $2400 $659 $319 $189 $560 + $129 $1,500 + $59 $3,320 + $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.) Answer is not complete Tip Top Flight School Flexible Budget Performance Report For the Month Ended July 31 Actual Revenue and Flexible Activity Results Spending Variances Budget Variances 155 155 Planning Budget 150 Lessons $ 36,970 $ 240 U $ 37,200 $1,200 F S 36,000 Revenue Expenses Instructor wages Aircraft depreciation Fuel (155) F 9.750 4,650 2.700 CC 9,920 4,805 3,270 2,530 2.205 3,815 26,545 $ 10,425 480 U 110 U (70) F (125) F 240 U >>> Maintenance Ground facility expenses Administration Total expense Net operating income 10.075 325 U 4,805 155 U 2,790 90U 2.420 60 U 2.275 25 U 3,940 20 U 26,305 6750 $ 10,895 $ 525F lolos 0 CCT po 2,360 2,250 3,920 25,630 $ 10,370 DO 3 $ (470) U