PROBLEM 10-21 Critique a Report; Prepare a Performance Report [LO 10-1, LO 10-4,

Question

PROBLEM 10-21 Critique a Report; Prepare a Performance Report [LO 10-1, LO 10-4, LO 10-6 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: I TipTop Flight School Variance Report For the Month Ended July 31 Actual Planning Results Budget Variances Lessons 155 150 $33,900 $33,000 $900 F Expenses Aircraft depreciation .. Fuel. Maintenance Ground facility expenses. Administration. 9,870 9,750 5,700 2,250 2,330 1,550 3.390 25,820 24,970 8,030 120 U 190 U 500 U 120 U 10 F 70 F 850 U $ 50 F 2.750 2.450 1,540 3,320 Total expense Net operating income s 8,080 $

Explanation / Answer

1. Yes the Owner, Feel frustrated with the variance report because instructor wages was already already controlled but shown in variance report as Unfaovourable. However, if detail analysis, it may be come to know that Planning Budget was made for 150 Lesson and Actual result was made for 155 Lesson. In real Owner expection was correct that no variance was exist in Instructor wages, if recalculated the Actua Viz-a -Viz Planning Budget for same no. of Lesson Original Budget Fixed Cost Variable Cost/Unit Flexible Budget Calculation Lesson $150.00 $155.00 Variable Plus Fixed Cost Maintainance $2,330.00 $530.00 $12.00 $2,390.00 (12*155)+530 Ground Facility $1,550.00 $1,250.00 $2.00 $1,560.00 (2*155)+1250 Administration $3,390.00 $3,240.00 $1.00 $3,395.00 (1*155)+3240 Total Variable & Fixed Expenditure $7,270.00 $5,020.00 $15.00 $7,345.00 Variable Expense Fuel $2,250.00 $15.00 $2,325.00 15*155 Instructor Wages $9,750.00 $65.00 $10,075.00 65*155 Aircraft Dep. $5,700.00 $38.00 $5,890.00 38*155 Total Variable Expenditure $17,700.00 $118.00 $18,290.00 Statement Showing Comparison for Flexible Budget to Actual Budget Actual Budget Flexible Budget Revenue & Spending Variance Status Lesson 155 155 Revenue 33900 34100 200 UF Variable Plus Fixed Cost Maintainance $2,450.00 $2,390.00 -$60.00 UF Ground Facility $1,540.00 $1,560.00 $20.00 F Administration $3,320.00 $3,395.00 $75.00 F Total Variable & Fixed Expenditure $7,310.00 $7,345.00 $35.00 F Variable Expense Fuel $2,750.00 $2,325.00 -$425.00 UF Instructor Wages $9,870.00 $10,075.00 $205.00 F Aircraft Dep. $5,890.00 $5,890.00 $0.00 N Total Variable Expenditure $18,510.00 $18,290.00 -$220.00 UF Total Expenditure $25,820.00 $25,635.00 -$185.00 UF Net Operating Income $8,080.00 $8,465.00 -$385.00 UF

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.