Question

TipTop Flight School offers flying lessons at a small municipal airport. The school’s owner and manager...

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 such variance 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. (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.)

Homework Answers

Answer #1
Tip Top Flight
Flexible Budget
Particulars Amount
No. of Lesson 155
Revenue $37,200.00
Expenses:
Instructor Wages $10,075.00
Aircreft Depreciation $4,805.00
Fuel $2,790.00
Maintainance $2,420.00
Ground Facility $2,275.00
Administration $3,940.00
Total Expense $26,305.00
Net Operating Income $10,895.00

Working for your refrence

Tip Top Flight
Flexible Budget
Particulars Amount
No. of Lesson 155
Revenue =240*155
Expenses:
Instructor Wages =65*155
Aircreft Depreciation =31*155
Fuel =18*155
Maintainance =560+12*155
Ground Facility =1500+5*155
Administration =3320+4*155
Total Expense =SUM(H569:H575)
Net Operating Income =H567-H576
Let me know if any doubt Kindly mark with positive rating it would help me lot. Thanks in advance.
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