Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 195 190
Revenue $ 40,830 $ 39,900 $ 930 F

Expenses:
Instructor wages 12,540 12,350 190 U
Aircraft depreciation 7,215 7,030 185 U
Fuel 4,280 3,800 480 U
Maintenance 3,250 3,140 110 U
Ground facility expenses 2,105 2,190 85 F
Administration 4,305 4,370 65 F

Total expense 33,695 32,880 815 U

Net operating income $ 7,135 $ 7,020 $ 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 $210q
Instructor wages $65q
Aircraft depreciation $37q
Fuel $20q
Maintenance $ 670 + $13q
Ground facility expenses $1,620 + $3q
Administration $4,180 + $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).)

TipTop Flight School
Flexible Budget Performance Report
For the Month Ended July 31
Actual Results Revenue and Spending Variances Flexible Budget Activity Variances
Lessons
Revenue
Expenses:
Instructor wages
Aircraft depreciation
Fuel
Maintenance
Ground facility expenses
Administration
Total expense
Net operating income

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditor Essentials 100 Concepts Tips Tools And Techniques For Success

Authors: Hernan Murdock

1st Edition

1138036919, 978-1138036918

More Books

Students also viewed these Accounting questions

Question

3. Identify cultural universals in nonverbal communication.

Answered: 1 week ago

Question

2. Discuss the types of messages that are communicated nonverbally.

Answered: 1 week ago