TipTop Flight School offers flying lessons at a small municipal airport. The school's owner and manager attempted to evaluate performance and control costs using a variance report comparing 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 Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expenses Net operating income Planning Budget Variances 225 220 $ 60,400 $59,400 $1,000 F 17,800 17,600 200 U 7,650 7,480 170 U 4,340 3,740 600 U 3,650 3,450 200 U 2,470 2,530 60 F 3,960 4,040 80 F 39,870 38,840 1,030 U $ 20,530 $ 20,560 $ 30 F After several months of using these reports, the owner has become frustrated. For example, she is confident instructor wages were very tightly controlled in July, but the report shows an unfavorable variance. She developed the planning budget using the following formulas, where q is the number of lessons sold: Revenue Instructor wages Aircraft depreciation Cost Formulas $2709 $80q $34q $179 $590 + $139 Ground facility expenses $1,650 + $49 $3,380 + $3q Fuel Maintenance Administration 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
TipTop Flight School offers flying lessons at a small municipal airport. The school's owner and manager attempted to evaluate performance and control costs using a variance report comparing 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 Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expenses Net operating income Planning Budget Variances 225 220 $ 60,400 $59,400 $1,000 F 17,800 17,600 200 U 7,650 7,480 170 U 4,340 3,740 600 U 3,650 3,450 200 U 2,470 2,530 60 F 3,960 4,040 80 F 39,870 38,840 1,030 U $ 20,530 $ 20,560 $ 30 F After several months of using these reports, the owner has become frustrated. For example, she is confident instructor wages were very tightly controlled in July, but the report shows an unfavorable variance. She developed the planning budget using the following formulas, where q is the number of lessons sold: Revenue Instructor wages Aircraft depreciation Cost Formulas $2709 $80q $34q $179 $590 + $139 Ground facility expenses $1,650 + $49 $3,380 + $3q Fuel Maintenance Administration 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:TipTop Flight School offers flying lessons at a small municipal airport. The school's owner and manager attempted to evaluate
performance and control costs using a variance report comparing 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
Total expenses
Net operating income
TipTop Flight School
Variance Report
For the Month Ended July 31
Actual Results
Planning
Budget
Variances
225
220
$ 60,400
$ 59,400
$ 1,000 F
17,800
17,600
200 U
7,650
7,480
170 U
4,340
3,740
600 U
3,650
3,450
200 U
2,470
2,530
60 F
3,960
4,040
80 F
39,870
38,840
1,030 U
$ 20,530
$ 20,560
$ 30 F
After several months of using these reports, the owner has become frustrated. For example, she is confident instructor wages were
very tightly controlled in July, but the report shows an unfavorable variance.
She developed the planning budget using the following formulas, where q is the number of lessons sold:
Revenue
Instructor wages
Aircraft depreciation
Cost Formulas
$2709
$809
$349
$179
$590 + $13q
Ground facility expenses
$1,650 +$49
$3,380 +$39
Fuel
Maintenance
Administration
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.
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