TipTop Flight School offers flying lessons at a small municipal airport. The sch
ID: 2432494 • Letter: T
Question
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: Tip Top Flight School Variance Report For the Month Ended July 31 Actual Planning ResultsBudget Variances 190 Lessons Revenue $ 42.720 $41.800 $920 F Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration 12,360 12,160 200 U 7,220 190 U 3,610 490 U 3,130 140 U 2,210 85 F 4,330 4,390 60 F 7,410 4,100 3,270 2,125 Total expense 33,595 32,720 875 U Net operating income 9,125 $ 9,080 S 45 FExplanation / Answer
Actual
flexible budget = actual lecture * rate
revenue and spending variance = actual -value at flexible budget
Variance Favorable and Unfavorable
planning budget
Activity Variance = flexible budget value-planning budget value
Variance
lessons
195
195
0
190
revenue
42720
42900
-180
F
41800
1100
F
expenses
instructor wages
12360
12480
-120
U
12160
320
U
aircraft depreciation
7410
7410
0
U
7220
190
U
fuel
4100
3705
395
U
3610
95
U
maintenance
3270
3195
75
U
3130
65
U
ground facility expense
2125
2225
-100
F
2210
15
U
administration
4330
4395
-65
F
4390
5
U
total expense
33595
33410
185
U
32720
690
U
net operating income
9125
9490
-365
U
9080
410
F
Actual
flexible budget = actual lecture * rate
revenue and spending variance = actual -value at flexible budget
Variance Favorable and Unfavorable
planning budget
Activity Variance = flexible budget value-planning budget value
Variance
lessons
195
195
0
190
revenue
42720
42900
-180
F
41800
1100
F
expenses
instructor wages
12360
12480
-120
U
12160
320
U
aircraft depreciation
7410
7410
0
U
7220
190
U
fuel
4100
3705
395
U
3610
95
U
maintenance
3270
3195
75
U
3130
65
U
ground facility expense
2125
2225
-100
F
2210
15
U
administration
4330
4395
-65
F
4390
5
U
total expense
33595
33410
185
U
32720
690
U
net operating income
9125
9490
-365
U
9080
410
F
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