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

Results

Planning

Budget

Variances

Lessons

155

150

Revenue

$

36,920

$

36,000

$

920

F

Expenses:

Instructor wages

9,870

9,750

120

U

Aircraft depreciation

4,960

4,800

160

U

Fuel

2,470

1,950

520

U

Maintenance

2,280

2,160

120

U

Ground facility expenses

1,680

1,700

20

F

Administration

3,440

3,520

80

F

Total expense

24,700

23,880

820

U

Net operating income

$

12,220

$

12,120

$

100

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, whereq is the number of lessons sold:

Cost Formulas

Revenue

$240q

Instructor wages

$65q

Aircraft depreciation

$32q

Fuel

$13q

Maintenance

$510 + $11q

Ground facility expenses

$1,250 + $3q

Administration

$3,220 + $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.)