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 TipTop Flight School Variance Report For the Month Ended July 31 Actual Results Planning Budget Variances 198 185 $ 45,450 $ 44,400 $ 1,050 F 12,180 12,025 155 U 7.418 7,215 195 U 3,425 2,775 650 U 3,015 2,860 155 U 2,925 3,010 85 F 4,295 4,405 110 F 33,250 32,290 960 U $ 12,200 $ 12,110 $ 90 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 $240q $65q $39q $15q $640 + $12q Ground facility expenses $1,900 + $6q $3,480 + $50 Fuel Maintenance Administration 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: Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income TipTop Flight School Variance Report For the Month Ended July 31 Actual Results Planning Budget Variances 198 185 $ 45,450 $ 44,400 $ 1,050 F 12,180 12,025 155 U 7.418 7,215 195 U 3,425 2,775 650 U 3,015 2,860 155 U 2,925 3,010 85 F 4,295 4,405 110 F 33,250 32,290 960 U $ 12,200 $ 12,110 $ 90 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 $240q $65q $39q $15q $640 + $12q Ground facility expenses $1,900 + $6q $3,480 + $50 Fuel Maintenance Administration 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
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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:
Lessons
Revenue
Expenses:
Instructor wages
Aircraft depreciation
Fuel
Maintenance
Ground facility expenses
Administration
Total expense
Net operating income
TipTop Flight School
Variance Report
For the Month Ended July 31
Actual Results
Planning
Budget
Variances
198
185
$ 45,450
$ 44,400
$ 1,050 F
12,180
12,025
155 U
7.418
7,215
195 U
3,425
2,775
650 U
3,015
2,860
155 U
2,925
3,010
85 F
4,295
4,405
110 F
33,250
32,290
960 U
$ 12,200
$ 12,110
$ 90 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
$240q
$65q
$39q
$15q
$640 + $12q
Ground facility expenses
$1,900 + $6q
$3,480 + $50
Fuel
Maintenance
Administration
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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