Question

Problem 9-22 Critique a Report; Prepare a Performance Report [LO9-1, LO9-2, LO9-3, LO9-4, LO9-6]

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		225			220
Revenue	$	60,400		$	59,400		$	1,000	F
Expenses:
Instructor wages		17,800			17,600			200	U
Aircraft depreciation		7,650			7,480			170	U
Fuel		4,340			3,740			600	U
Maintenance		3,650			3,450			200	U
Ground facility expenses		2,470			2,530			60	F
Administration		3,960			4,040			80	F
Total expense		39,870			38,840			1,030	U
Net operating income	$	20,530		$	20,560		$	30	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	$270q
Instructor wages	$80q
Aircraft depreciation	$34q
Fuel	$17q
Maintenance	$590 + $13q
Ground facility expenses	$1,650 + $4q
Administration	$3,380 + $3q

  
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.)

Answer 1