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 250 240 Revenue $ 50,640 $ 50,400 $ 240 F Expenses: Instructor wages 15,700 15,120 580 U Aircraft depreciation 14,000 13,440 560 U Fuel 5,700 4,800 900 U Maintenance 4,270 4,010 260 U Ground facility expenses 2,500 2,590 90 F Administration 4,365 4,430 65 F Total expense 46,535 44,390 2,145 U Net operating income $ 4,105 $ 6,010 $ -1,905 U 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 $210 q Instructor wages $63 q Aircraft depreciation $56 q Fuel $20 q Maintenance $ 650 + $14 q Ground facility expenses $1,630 + $4 q Administration $4,190 + $1 q 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).)
