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 Planning Budget Variances Lessons 155 150 Revenue $ 36,970 $ 36,000 $ 970 F Expenses: Instructor wages 9,920 9,750 170 U Aircraft depreciation 4,805 4,650 155 U Fuel 3,270 2,700 570 U Maintenance 2,530 2,360 170 U Ground facility expenses 2,205 2,250 45 F Administration 3,815 3,920 105 F Total expense 26,545 25,630 915 U Net operating income $ 10,425 $ 10,370 $ 55 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 $240q Instructor wages $65q Aircraft depreciation $31q Fuel $18q Maintenance $560 + $12q Ground facility expenses $1,500 + $5q Administration $3,320 + $4q 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

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:

	Actual Results	Planning Budget	Variances
TipTop Flight School Variance Report For the Month Ended July 31
Lessons	155	150
Revenue	$ 36,970	$ 36,000	$ 970	F
Expenses:
Instructor wages	9,920	9,750	170	U
Aircraft depreciation	4,805	4,650	155	U
Fuel	3,270	2,700	570	U
Maintenance	2,530	2,360	170	U
Ground facility expenses	2,205	2,250	45	F
Administration	3,815	3,920	105	F
Total expense	26,545	25,630	915	U
Net operating income	$ 10,425	$ 10,370	$ 55	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	$240q
Instructor wages	$65q
Aircraft depreciation	$31q
Fuel	$18q
Maintenance	$560 + $12q
Ground facility expenses	$1,500 + $5q
Administration	$3,320 + $4q

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.

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
Total expense
Net operating income
Revenue
Instructor wages.
Aircraft depreciation
Fuel
Maintenance
Ground facility expenses
Administration
Lessons
Revenue
TipTop Flight School
Variance Report
For the Month Ended July 31
Expenses:
Instructor wages
Aircraft depreciation
Fuel
Maintenance
Ground facility expenses
Administration
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:
Actual
Results
155
$36,970
Actual
Results
9,920
4,805
Cost Formulas
$240g
$65q
$31g
$18q
$560 + $12g
$1,500+ $5g
$3,320+ $4g
155
3,270
2,530
$36,970
2,205
3,815
26,545
$ 10,425
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.
9,920
4,805
3,270
2,530
2,205
3,815
26,545
$ 10,425
Planning
Budget
150
$ 36,000
TipTop Flight School
Flexible Budget Performance Report
For the Month Ended July 31
9,750
4,650
2,700
2,360
2,250
3,920
25,630
$ 10,370
Variances
$ 970 F
170 U
155 U
570 U
170 U
45 F
105 F
915 U
$ 55 F
Flexible
Budget
Planning
Budget
150
$ 36,000
9,750
4,650
2,700
2,360
2,250
3,920
25,630
$ 10,370

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions