10-1, LO 10-4, LO 10-6 PROBLEM 10-21 critique a Report; Prepare a Performance Re
ID: 2552947 • Letter: 1
Question
10-1, LO 10-4, LO 10-6 PROBLEM 10-21 critique a Report; Prepare a Performance Report LO 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 that compares the planning budget to actual results. A recent variance report appears below: costs using a variance report TipTop Flight School Variance Report For the Month Ended July 31 Actual Planning Results Budget Variances Lessons 155 150 I Revenue.... $33,900 $33000 $900 F Expenses: Aircraft depreciation. Fuel. Maintenance . Ground facility expenses. 9,870 9,750 5,890 5,700 2.750 2.250 2,450 2,330 1540 1,550 3,320 3,390 25,820 24,970 120 U 190 U 500 U 120 U 10 F 70 F 850 U Total expense .. Net operating income . $ 8,080 $8,030 50 FExplanation / Answer
1)The owner should not feel frustrated as he has made comparision between the planned result with actual results .HOwever actual activity is more than planned activity therefore adjustment to data should be made for better comparision by calculating standard cost for actual activity.
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3)The school has underperformed has the net operating income shows an unfavorable variance of 385 which means the school has earned less profit than profit that should be earned for actual activity
Actual Flexible Variance lessons 155 155 Revenue 33900 34100 [220*155] 200 U [34100-33900] expenses Instructor wages 9870 10075 [65*155] -205 F aircraft depreciation 5890 5890 [38*155] 0 Fuel 2750 2325 [15*155] 425 U maintenance 2450 2390 [530+(12*155)] 60 U Ground facility 1540 1560 [1250+(2*155)] -20 F administration 3320 3395 [3240+(1*155)] -75 F Total expense 25820 25635 185 U Net operating income 8080 8465 385 URelated Questions
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