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 225 220

Revenue $62,690 $61,600 $1,090F

Expenses:

Instructor wages 13,395 13,200 195U

Aircraft depreciation7,650 7,480 170U

Fuel 4,870 4,180 690 U

Maintenance 4,395 4,200 195U

Ground facility expenses3,180 3,200 20F

Administration 4,250 4,440 190 F

Total expense 37,740 36,700 1,100U

Net operating income $24,950 $24,900 $50F

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 $280q

Instructor wages $60q

Aircraft depreciation $34q

Fuel $19q

Maintenance $680 + $16q

Ground facility expenses $2,100 + $5q

Administration $3,560 + $4q

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.)