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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 225 220
Revenue $ 60,400 $ 59,400 $ 1,000 F
Expenses:
Instructor wages 17,800 17,600 200 U
Aircraft depreciation 7,650 7,480 170 U
Fuel 4,340 3,740 600 U
Maintenance 3,650 3,450 200 U
Ground facility expenses 2,470 2,530 60 F
Administration 3,960 4,040 80 F
Total expense 39,870 38,840 1,030 U
Net operating income $ 20,530 $ 20,560 $ 30 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 $270q
Instructor wages $80q
Aircraft depreciation $34q
Fuel $17q
Maintenance $590 + $13q
Ground facility expenses $1,650 + $4q
Administration $3,380 + $3q

Required:

2.Complete the flexible budget performance report for the school for July.

Note: 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 Revenue and Spending Variances Flexible Budget Activity Variances Planning Budget
Lessons 225 not attempted 220
Revenue $60,400 not attempted not attempted not attempted not attempted not attempted $59,400
Expenses:
Instructor wages 17,800 not attempted not attempted not attempted not attempted not attempted 17,600
Aircraft depreciation 7,650 not attempted not attempted not attempted not attempted not attempted 7,480
Fuel 4,340 not attempted not attempted not attempted not attempted not attempted 3,740
Maintenance 3,650 not attempted not attempted not attempted not attempted not attempted 3,450
Ground facility expenses 2,470 not attempted not attempted not attempted not attempted not attempted 2,530
Administration 3,960 not attempted not attempted not attempted not attempted not attempted 4,040
Total expense 39,870 not attempted not attempted not attempted not attempted not attempted 38,840
Net operating income $20,530 not attempted not attempted not attempted not attempted not attempted $20,560

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