TipTop Flight School offers flying lessons at a small municipal airport. The schools owner and manager attempted to evaluate performance and control costs using a variance report comparing the planning budget to actual results. A recent variance report appears below:
TipTop Flight School
Variance Report
For the Month Ended July
Actual Results Planning Budget Variances
Lessons
Revenue $ $ $ F
Expenses:
Instructor wages U
Aircraft depreciation U
Fuel U
Maintenance U
Ground facility expenses F
Administration F
Total expenses U
Net operating income $ $ $ F
After several months of using these reports, the owner has become frustrated. For example, she is confident instructor wages were very tightly controlled in July, but the report shows an unfavorable variance.
She developed the planning budget using the following formulas, where q is the number of lessons sold:
Cost Formulas
Revenue $q
Instructor wages $q
Aircraft depreciation $q
Fuel $q
Maintenance $ $q
Ground facility expenses $ $q
Administration $ $q
Required:
Complete the flexible budget performance report for the school for July.
