TipTop Flight School

Variance Report

For the Month Ended July 31Actual

ResultsPlanning

BudgetVariancesLessons175170Revenue$36,640$35,700$940FExpenses:Instructor wages8,6408,500140UAircraft depreciation6,3006,120180UFuel2,4101,870540UMaintenance2,0301,890140UGround facility expenses1,6601,69030FAdministration3,3403,43090FTotal expense24,38023,500880UNet operating income$12,260$12,200$60F

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, whereqis the number of lessons sold:

Cost FormulasRevenue$210qInstructor wages$50qAircraft depreciation$36qFuel$11qMaintenance$530 + $8qGround facility expenses$1,350 + $2qAdministration$3,260 + $1q

Required:

2.Fill in 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.)

TipTop Flight School Flexible Budget Performance Report For the Month Ended July 31 Actual Flexible Results Planning Budget Budget Lessons 175 170 Revenue $ 36,640 F $ 35,700 Expenses: Instructor wages $ 8,640 F U 8,500 Aircraft depreciation 6,300 None 6,120 Fuel 2,410 C 1,870 Maintenance 2,030 C 1,890 Ground facility expenses 1,660 F TC C C CCC 1,690 Administration 3,340 -LL 3,430 Total expense 24,380 23,500 C Net operating income $ 12,260 $ 12,200