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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 155 150
Revenue $ 33,900 $ 33,000 $ 900 F
Expenses:
Instructor wages 9,870 9,750 120 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:

Cost Formulas
Revenue $220q
Instructor wages $65q
Aircraft depreciation $38q
Fuel $15q
Maintenance $530 + $12q
Ground facility expenses $1,250 + $2q
Administration $3,240 + $1q

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.)

TipTop Flight School
Flexible Budget Performance Report
For the Month Ended July 31
Actual Results Flexible Budget Planning Budget
Lessons 155 150
Revenue $33,900 $33,000
Expenses:
Instructor wages 9,870 9,750
Aircraft depreciation 5,890 5,700
Fuel 2,750 2,250
Maintenance 2,450 2,330
Ground facility expenses 1,540 1,550
Administration 3,320 3,390
Total expense 25,820 24,970
Net operating income

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