TipTop Flight School, Managerial Accounting 9.3 help

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

$

32,470

$

31,500

$

970

F







Expenses:

Instructor wages

9,800

9,600

200

U

Aircraft depreciation

5,890

5,700

190

U

Fuel

3,630

3,150

480

U

Maintenance

2,570

2,460

110

U

Ground facility expenses

2,025

2,090

65

F

Administration

4,260

4,360

100

F







Total expense

28,175

27,360

815

U







Net operating income

$

4,295

$

4,140

$

155

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

$210q

Instructor wages

$64q

Aircraft depreciation

$38q

Fuel

$21q

Maintenance

$ 660 + $12q

Ground facility expenses

$1,640 + $3q

Administration

$4,210 + $1q


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).)

 
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