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Problem 9-22 Critique a Report; Prepare a Performance Report [LO9-1, LO9-2, LO9-3, LO9-4, LO9-6]

TipTop Flight School offers flying lessons at a small municipal airport. The schools 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		200			195
Revenue	$	49,810		$	48,750		$	1,060	F
Expenses:
Instructor wages		13,815			13,650			165	U
Aircraft depreciation		8,000			7,800			200	U
Fuel		3,780			3,120			660	U
Maintenance		3,350			3,185			165	U
Ground facility expenses		2,250			2,340			90	F
Administration		3,575			3,695			120	F
Total expense		34,770			33,790			980	U
Net operating income	$	15,040		$	14,960		$	80	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	$250q
Instructor wages	$70q
Aircraft depreciation	$40q
Fuel	$16q
Maintenance	$650 + $13q
Ground facility expenses	$1,950 + $2q
Administration	$3,500 + $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). Input all amounts as positive values.)

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