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TipTop Flight School offers flying lessons at a small municipal airport. The schools owner and manager has been attempting to evaluate performance and control costs

TipTop Flight School offers flying lessons at a small municipal airport. The schools 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 Results Planning Budget Variances
Lessons 165 160
Revenue $ 40,930 $ 40,000 $ 930 F
Expenses:
Instructor wages 11,330 11,200 130 U
Aircraft depreciation 5,610 5,440 170 U
Fuel 2,450 1,920 530 U
Maintenance 2,090 1,960 130 U
Ground facility expenses 1,915 1,940 25 F
Administration 3,635 3,720 85 F
Total expense 27,030 26,180 850 U
Net operating income $ 13,900 $ 13,820 $ 80 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 q is the number of lessons sold:

Cost Formulas
Revenue $250q
Instructor wages $70q
Aircraft depreciation $34q
Fuel $12q
Maintenance $520 + $9q
Ground facility expenses $1,300 + $4q
Administration $3,240 + $3q

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.)

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TipTop Flight School Flexible Budget Performance Report For the Month Ended July 31 Actual Results 165 Flexible Budget Planning Budget 160 Lessons $ 40,930 $ 40,000 Revenue Expenses: $ 11,330 Instructor wages Aircraft depreciation Fuel Maintenance 11,200 5,440 1,920 1,960 1,940 3,720 26,180 $ 13,820 5,610 2,450 2,090 1,915 3,635 27,030 $ 13,900 Ground facility expenses Administration Total expense Net operating income

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