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 Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income Actual Results 210 Planning Budget Variances 205 $ 52,230 $ 51,250 $ 980 F 14,530 14,350 180 U 6,720 6,560 160 U 3,655 3,075 580 U 3,415 3,235 180 U 1,910 1,960 50 F 3,435 3,545 110 F 33,665 32,725 940 U $ 18,565 $ 18,525 $ 40 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 Cost Formulas $250q $709 $32q $15q Fuel $570 + $13q Ground facility expenses $1,550 + $2q $3,340 + $1q 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 lie. zero < Prev 3 of 4 Next >
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 Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income Actual Results 210 Planning Budget Variances 205 $ 52,230 $ 51,250 $ 980 F 14,530 14,350 180 U 6,720 6,560 160 U 3,655 3,075 580 U 3,415 3,235 180 U 1,910 1,960 50 F 3,435 3,545 110 F 33,665 32,725 940 U $ 18,565 $ 18,525 $ 40 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 Cost Formulas $250q $709 $32q $15q Fuel $570 + $13q Ground facility expenses $1,550 + $2q $3,340 + $1q 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 lie. zero < Prev 3 of 4 Next >
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
Lessons
Revenue
Expenses:
Instructor wages
Aircraft depreciation
Fuel
Maintenance
Ground facility expenses
Administration
Total expense
Net operating income
Actual
Results
210
Planning
Budget
Variances
205
$ 52,230
$ 51,250
$ 980 F
14,530
14,350
180 U
6,720
6,560
160 U
3,655
3,075
580 U
3,415
3,235
180 U
1,910
1,960
50 F
3,435
3,545
110 F
33,665
32,725
940 U
$ 18,565
$ 18,525
$ 40 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
Cost Formulas
$250q
$709
$32q
$15q
Fuel
$570 + $13q
Ground facility expenses
$1,550 + $2q
$3,340 + $1q
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 lie. zero
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