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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 180 175
Revenue $ 41,290 $ 40,250 $ 1,040 F
Expenses:
Instructor wages 10,645 10,500 145 U
Aircraft depreciation 6,840 6,650 190 U
Fuel 3,090 2,450 640 U
Maintenance 2,700 2,555 145 U
Ground facility expenses 2,470 2,550 80 F
Administration 3,885 3,985 100 F
Total expense 29,630 28,690 940 U
Net operating income $ 11,660 $ 11,560 $ 100 F

After several months of using these 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 $230q
Instructor wages $60q
Aircraft depreciation $38q
Fuel $14q
Maintenance $630 + $11q
Ground facility expenses $1,850 + $4q
Administration $3,460 + $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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