16.00 points Problem 9-21 Critique a Report; Prepare a Performance Report LO9-1,

Question

16.00 points Problem 9-21 Critique a Report; Prepare a Performance Report LO9-1, LO9-4, LO9-6] TipTop Flight School offers fying lessons at a smaill municipal airport. The schoors 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 varianoe report appears below TipTop Flight School Variance Report For the Month Ended July 31 Actual Planning ResultsBudget Variances 195 190 Lessons Revenue 542,740 41,800 5940 F Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses 12,510 2,350 160 U 7,410 4,060 3,060 2,300 4,325 7,220 190 U 3,610 450 U 2,950 110 U 2,400 100 F 4,380 55 F Total expense 33,665 32,910 755 U Net operating income S 9,075 8,890 5185 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 anance The planning budget was developed using the following formulas, where q is the number of lessons sold:

Explanation / Answer

Prepare flexible budget performance report :

Actual results Revenue and spending variance Flexible budget Activitiy variance Planning budget Lesson 195 195 190 Revenue 42740 160 U 42900 1100 F 41800 Expenses : Instructor wages 12510 165 F 12675 325 U 12350 Aircraft dep 7410 None 7410 190 U 7220 Fuel 4060 355 U 3705 95 U 3610 Maintenance 3060 50 U 3010 60 U 2950 Ground facility expenses 2300 120 F 2420 20 U 2400 Administration 4325 60 F 4385 5 U 4380 Total expense 33665 60 U 33605 695 U 32910 Net operating income 9075 220 U 9295 405 F 8890

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