Question

nce Report L09-1, L09-2, LO9-3, L09-4, LO9-6 PROBLEM 9-22 Critique a Report: Prepare a Performance Report L09-1, Tip Top Flight School offers flying lessons at a small municipal airport es Tlying lessons at a small municipal airport. The school's owned manager has been attempting to evaluate performance and control cos that compares the planning budget to actual results. A recent variance report appe and control costs using a variance report ent variance report appears below: Planning Budget Variances 150 $33,000 $900 F TipTop Flight School Variance Report For the Month Ended July 31 Actual Results Lessons 155 Revenue ........... $33,900 Expenses: Instructor wages.... 9,870 Aircraft depreciation ... 5.890 Fuel 2.750 Maintenance ..... 2.450 Ground facility expenses .. 1.540 Administration. 3.320 Total expense . . . . . . . . . . . . 25,820 Net operating income .... $ 8,080 9.750 5,700 2,250 2.330 1.550 3,390 24.970 $ 8,030 120 U 190 U 500 U 120 U 10 F 70 F 850 U $ 50 F After several months of using such variance reports, the owner has become frustrated. Fo 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 is the number of lessons sold: Revenue. Instructor wages.. Aircraft depreciation Fuel Maintenance Ground facility expenses ............ Administration .... Cost Formulas $2209 $659 $389 $159 $530+ $129 $1.250 + $24 $3,240 + $19 Required: 1. Should the owner feel frustrated with the variance reports? Explain. 2. Using Exhibit 9-8 as your guide, prepare a flexible budget performance report for the se performance report for the school for July 3. Evaluate the school's performance for July.