TipTop Flight School, Managerial Accounting 9.3 help

User Generated

YruylZ

Business Finance

Description

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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Explanation & Answer

Hello again, Please find the solution attachedAll the best

TipTop Flight School
Variance Report
For the Month Ended July 31
Lessons
Revenue
Expenses:
Instructor Wages
Aircraft Depreciation
Fuel
Maintenance
Ground Facility
Administration
Total Expenses
Net Opertaing Income
...


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