Question

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: its TipTop Flight School Variance Report For the Month Ended July 31 Actual Planning Results Budget va 140135 eBook Lessons Ask $33,420 $32,400 $1, Print un References Revenue Expenses : Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income 6,875 6,750 5,040 4,860 3,185 2,565 2,895 2,770 1,950 2,20 3,465 3,555 23,410 22,520 $10,010 $ 9,880 180 U 620 U 125 U 70 F 90 F 890 U $ 130 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 is the number of lessons sold: < Prev 11 of 13 Next >

Answer 1

Tip Top Flight School
Flexible Budget Performance Report
For the month ended July 31
	Actual Results	Revenue/Spending		Flexible	Activity		Planning
		Variance		Budget	Variance		Budget
	($)	($)		($)			($)
Lessons (q)	140.00			140.00			135.00
Revenue ($240q)	33,420.00	180.00	U	33,600.00	1,200.00	F	32,400.00
Expenses:
Instructor wages ($50q)	6,875.00	125.00	F	7,000.00	250.00	U	6,750.00
Aircraft depreciation ($36q)	5,040.00	-	-	5,040.00	180.00	U	4,860.00
Fuel ($19q)	3,185.00	525.00	U	2,660.00	95.00	U	2,565.00
Maintenance ($610 + $16q)	2,895.00	45.00	U	2,850.00	80.00	U	2,770.00
Ground facility expenses ($1,750 + $2q)	1,950.00	80.00	F	2,030.00	10.00	U	2,020.00
Administration ($3,420 + $1q)	3,465.00	95.00	F	3,560.00	5.00	U	3,555.00
Total Expense	23,410.00	270.00	U	23,140.00	620.00	U	22,520.00
Net Operating Income	10,010.00	450.00	U	10,460.00	580.00	F	9,880.00
(Revenue - Expenses)
Explanation
Revenue/Spending Variance = Actual Result - Flexible Budget Amount
Activity Variances = Flexible Budget Amounts - Planning Budget Amounts