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: Tip Top Flight School Variance Report For the Month Ended July 31 9,750 Actual Results Planning Budget Valences Lessons 155 150 Revenue $33.900 $33.000 $900 F Expenses: Instructor wages 9,870 120 U Aircraft depreciation 5,890 5,700 190 U Fuel 2,750 2,250 500 U Maintenance 2,450 2,330 120 U Ground facility expenses 1,540 1,550 10 F Administration 3.320 3.390 70 F Total expense 25,820 24.970 850 U Net operating income $ 8,080 $ 8,030 $ 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 q is the number of lessons sold: Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Cost Formulas $2209 $654 $389 $159 $530+$129 $1,250 + $29 $3,240 + Slq Required: 1. Should the owner feel frustrated with the variance reports? Explain. 2. Prepare a flexible budget performance report for school for July 3. Evaluate the school performance for July