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Tiplop Flight School offers flying lessons at a small municipal airport. The school's 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: Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration TipTop Flight School Variance Report For the Month Ended July 31 Total expense Net operating income Actual Results 225 $ 60,400 17,800 7,650 4,340 3,650 2,470 3,960 39,870 $ 20,530 Planning Budget 220 $ 59,400 17,600 7,480 3,740 3,450 2,530 4,040 38,840 $ 20,560 Variances $ 1,000 F 200 U 170 U 600 U 200 U 60 F 80 F 1,030 U $ 30 F After several months of using these reports, the owner has become frustrated. For example, she is quite confident that nstructor 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:

Tiplop Flight School offers flying lessons at a small municipal airport. The school's 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: Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration TipTop Flight School Variance Report For the Month Ended July 31 Total expense Net operating income Actual Results 225 $ 60,400 17,800 7,650 4,340 3,650 2,470 3,960 39,870 $ 20,530 Planning Budget 220 $ 59,400 17,600 7,480 3,740 3,450 2,530 4,040 38,840 $ 20,560 Variances $ 1,000 F 200 U 170 U 600 U 200 U 60 F 80 F 1,030 U $ 30 F After several months of using these reports, the owner has become frustrated. For example, she is quite confident that nstructor 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:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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TipTop Flight School offers flying lessons at a small municipal airport. The school's 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: Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration TipTop Flight School Variance Report For the Month Ended July 31 Total expense Net operating income Actual Results 225 $ 60,400 17,800 7,650 4,340 3,650 2,470 3,960 39,870 $ 20,530 Planning Budget 220 $ 59,400 17,600 7,480 3,740 3,450 2,530 4,040 38,840 $ 20,560 Variances $ 1,000 F 200 U 170 U 600 U 200 U 60 F 80 F 1,030 U $ 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:
Transcribed Image Text:TipTop Flight School offers flying lessons at a small municipal airport. The school's 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: Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration TipTop Flight School Variance Report For the Month Ended July 31 Total expense Net operating income Actual Results 225 $ 60,400 17,800 7,650 4,340 3,650 2,470 3,960 39,870 $ 20,530 Planning Budget 220 $ 59,400 17,600 7,480 3,740 3,450 2,530 4,040 38,840 $ 20,560 Variances $ 1,000 F 200 U 170 U 600 U 200 U 60 F 80 F 1,030 U $ 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:
Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Lessons Revenue Expenses: 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.) Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Cost Formulas $270g $80g $34g $17g $590+ $13g Total expense Net operating income $1,650 + $4q $3,380+ $3q TipTop Flight School Flexible Budget Performance Report For the Month Ended July 31 Actual Results 225 $ 60,400 17,800 7,650 4,340 3,650 2,470 3,960 39,870 $ 20,530 Flexible Budget Planning Budget 220 $ 59,400 $ 17,600 7,480 3,740 3,450 2,530 4,040 38,840 20,560
Transcribed Image Text:Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Lessons Revenue Expenses: 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.) Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Cost Formulas $270g $80g $34g $17g $590+ $13g Total expense Net operating income $1,650 + $4q $3,380+ $3q TipTop Flight School Flexible Budget Performance Report For the Month Ended July 31 Actual Results 225 $ 60,400 17,800 7,650 4,340 3,650 2,470 3,960 39,870 $ 20,530 Flexible Budget Planning Budget 220 $ 59,400 $ 17,600 7,480 3,740 3,450 2,530 4,040 38,840 20,560
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