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