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 | 210 | 205 | ||||||||
Revenue | $ | 54,370 | $ | 53,300 | $ | 1,070 | F | |||
Expenses: | ||||||||||
Instructor wages | 15,550 | 15,375 | 175 | U | ||||||
Aircraft depreciation | 6,720 | 6,560 | 160 | U | ||||||
Fuel | 4,155 | 3,485 | 670 | U | ||||||
Maintenance | 3,705 | 3,530 | 175 | U | ||||||
Ground facility expenses | 2,605 | 2,615 | 10 | F | ||||||
Administration | 3,790 | 3,930 | 140 | F | ||||||
Total expense | 36,525 | 35,495 | 1,030 | U | ||||||
Net operating income | $ | 17,845 | $ | 17,805 | $ | 40 | 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 | $260q |
Instructor wages | $75q |
Aircraft depreciation | $32q |
Fuel | $17q |
Maintenance | $660 + $14q |
Ground facility expenses | $2,000 + $3q |
Administration | $3,520 + $2q |
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:
TipTop Flight School Variance Report For the Month Ended July 31 |
||||||||||
Actual Results |
Planning Budget |
Variances | ||||||||
Lessons | 210 | 205 | ||||||||
Revenue | $ | 54,370 | $ | 53,300 | $ | 1,070 | F | |||
Expenses: | ||||||||||
Instructor wages | 15,550 | 15,375 | 175 | U | ||||||
Aircraft depreciation | 6,720 | 6,560 | 160 | U | ||||||
Fuel | 4,155 | 3,485 | 670 | U | ||||||
Maintenance | 3,705 | 3,530 | 175 | U | ||||||
Ground facility expenses | 2,605 | 2,615 | 10 | F | ||||||
Administration | 3,790 | 3,930 | 140 | F | ||||||
Total expense | 36,525 | 35,495 | 1,030 | U | ||||||
Net operating income | $ | 17,845 | $ | 17,805 | $ | 40 | 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 | $260q |
Instructor wages | $75q |
Aircraft depreciation | $32q |
Fuel | $17q |
Maintenance | $660 + $14q |
Ground facility expenses | $2,000 + $3q |
Administration | $3,520 + $2q |
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
Actual results |
Revenue & Spending Variance |
Flexible Budget |
Activity Variance |
Planning Budget |
|||
Lessons |
210 |
210 |
205 |
||||
Revenues |
$ 54,370.00 |
$ 230.00 |
Unfavorable |
$ 54,600.00 |
$ 1,300.00 |
Favourable |
$ 53,300.00 |
Expenses: |
|||||||
Instructer wages |
$ 15,550.00 |
$ 200.00 |
Favourable |
$ 15,750.00 |
$ 375.00 |
Unfavorable |
$ 15,375.00 |
Aircraft Depreciation |
$ 6,720.00 |
$ - |
None |
$ 6,720.00 |
$ 160.00 |
Unfavorable |
$ 6,560.00 |
Fuel |
$ 4,155.00 |
$ 585.00 |
Unfavorable |
$ 3,570.00 |
$ 85.00 |
Unfavorable |
$ 3,485.00 |
Maintenance |
$ 3,705.00 |
$ 105.00 |
Unfavorable |
$ 3,600.00 |
$ 70.00 |
Unfavorable |
$ 3,530.00 |
Ground Facility Expenses |
$ 2,605.00 |
$ 25.00 |
Favourable |
$ 2,630.00 |
$ 15.00 |
Unfavorable |
$ 2,615.00 |
Administration |
$ 3,790.00 |
$ 150.00 |
Favourable |
$ 3,940.00 |
$ 10.00 |
Unfavorable |
$ 3,930.00 |
Total Expenses |
$ 36,525.00 |
$ 315.00 |
Unfavorable |
$ 36,210.00 |
$ 715.00 |
Unfavorable |
$ 35,495.00 |
Net Operating Income |
$ 17,845.00 |
$ 545.00 |
Unfavorable |
$ 18,390.00 |
$ 585.00 |
Favourable |
$ 17,805.00 |
--Working
Actual results |
Flexible Budget |
Planning Budget |
|||||||
Lessons |
210 |
210 |
205 |
||||||
Revenues |
54370 |
=210*260 |
=205*260 |
||||||
Expenses: |
|||||||||
Instructer wages |
15550 |
=210*75 |
=205*75 |
||||||
Aircraft Depreciation |
6720 |
=210*32 |
=205*32 |
||||||
Fuel |
4155 |
=210*17 |
=205*17 |
||||||
Maintenance |
3705 |
=660+(210*14) |
=660+(205*14) |
||||||
Ground Facility Expenses |
2605 |
=2000+(210*3) |
=2000+(205*3) |
||||||
Administration |
3790 |
=+F1887-C1887 |
Favourable |
=3520+(210*2) |
=+F1887-I1887 |
Unfavorable |
=3520+(205*2) |
||
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 Planning Results Budget 210205 Variances Lessons $ 54, 370 $ 53,300 $1,070 F Revenue Expenses : Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses...
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 220 215 Revenue $ 59,130 $ 58,050 $ 1,080 F Expenses: Instructor wages 17,385 17,200 185 U Aircraft depreciation 7,260...
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 180 Planning Budget 175 Variances Lessons $ 41,290 $ 40,250 $1,040 F Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration...
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 Planning Results Budget 180 175 Variances Lessons $ 41,290 $ 40,250 $1,040 F Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration...
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 215 $ 59,130 $ 58,050 $1,080 F Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense...
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 210 Planning Budget 205 Variances Lessons $ 52,230 $ 51,250 $ 980 F Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses...
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 Planning Results Budget Variances 220 215 Lessons $ 56,890 $ 55,900 $ 990 F Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses...
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 Planning Results Budget 225 220 Variances Lessons $ 60,400 $ 59,400 $1,000 F Revenue Expenses : Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses...
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 180 175 Revenue $ 41,290 $ 40,250 $ 1,040 F Expenses: Instructor wages 10,645 10,500 145 U Aircraft depreciation 6,840...
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 125 Variances Lessons 18e $ 41,290 $ 40,250 $1,048 F Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total...