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 145 140

Revenue $ 36,030 $ 35,000 $ 1,030 F

Expenses:

Instructor wages 7,835 7,700 135 U

Aircraft depreciation 5,365 5,180 185 U

Fuel 3,430 2,800 630 U

Maintenance 3,135 3,000 135 U

Ground facility expenses 2,145 2,220 75 F

Administration 3,625 3,720 95 F

Total expense 25,535 24,620 915 U

Net operating income $ 10,495 $ 10,380 $ 115 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 $250q

Instructor wages $55q

Aircraft depreciation $37q

Fuel $20q

Maintenance $620 + $17q

Ground facility expenses $1,800 + $3q

Administration $3,440 + $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.)