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: TipTop Flight School variance Report For the Month Ended July 31 Actual Results 230 $ 66, 350 Planning Budget 225 $ 65,250 Variances Lessons $ 1,100 F Revenue Expenses: Instructor wages Aircraft depreciation 14,830 8,050 5, 200 4,720 3,025 4,175 40, 000 $ 26,350 14,625 7,875 4,500 4,515 3,050 4,255 38,820 $ 26,430 205 U 175 U Fuel Maintenance Ground facility expenses Administration Total expense 700 U 205 U 25 F 80 F 1, 180 U $ 80 F Net operating income 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 Cost Formulas $2909 $659 $35q $209 $690 + $17q $2,150 + $4q $3,580 + $39 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.)
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: TipTop Flight School variance Report For the Month Ended July 31 Actual Results 230 $ 66, 350 Planning Budget 225 $ 65,250 Variances Lessons $ 1,100 F Revenue Expenses: Instructor wages Aircraft depreciation 14,830 8,050 5, 200 4,720 3,025 4,175 40, 000 $ 26,350 14,625 7,875 4,500 4,515 3,050 4,255 38,820 $ 26,430 205 U 175 U Fuel Maintenance Ground facility expenses Administration Total expense 700 U 205 U 25 F 80 F 1, 180 U $ 80 F Net operating income 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 Cost Formulas $2909 $659 $35q $209 $690 + $17q $2,150 + $4q $3,580 + $39 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.)
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 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
230
$ 66, 350
Planning
Budget
225
$ 65,250
Variances
Lessons
$ 1,100 F
Revenue
Expenses:
Instructor wages
Aircraft depreciation
14,830
8,050
5, 200
4,720
14,625
7,875
4,500
4,515
3,050
4,255
38,820
$ 26,430
205 U
175 U
Fuel
Maintenance
Ground faciuty expenses
Administration
700 U
3,025
4,175
40, 000
$ 26,350
205 U
25 F
80 F
1, 180 U
$ 80 F
Total expense
Net operating income
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
Cost Formulas
$2909
$659
$359
$289
$690 + $179
$2,150 + $4q
$3,580 + $39
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.)
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