Problem 9-22 Critique a Report; Prepare a Performance Report [LO9-1, LO9-2, LO9-
ID: 2558304 • Letter: P
Question
Problem 9-22 Critique a Report; Prepare a Performance Report [LO9-1, LO9-2, LO9-3, LO9-4, LO9-6] 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 varian report appears below Variance Report For the Month Ended July 31 Actual Planning Results 155 Revenue 36,928 36,88 $ 928 F Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration 9,870 9,758 128U 4,800 160 U 1,950 520 U 2,280 2,160 128 u 20 F 80 F 23.880 82e U $ 12,22e s 12,120 $ 100 F 4,960 4,see 2,429 1,688 24.700 1,700 3,528 Total expense 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 variance. The planning budget was developed using the following formulas, where q is the number of lessons sold: 248q $65q $32q $13q $518 $11q $1,25e$34 $3,228$2q Instructor wages Maintenance Ground facility expenses Administration Required: 2. Complete fevorable, "U" for unfevorable, and "None" for no effect tie zero yarinncel lnptellmounte s mance report for the school for July. (Indicate the effect of each variance by selecting "F forExplanation / Answer
Tip Top Flight School Flexible Budget Performance Report For the Month Ended July 31 Actual Activity Variances Flexible budget Variance Planning results Budget Lessons 155 155 150 Revenue 36920 1200 F 37200 280 U 36000 Expneses: Instructor wages 9870 325 U 10075 205 F 9750 Aircraft depreciation 4960 160 U 4960 0 4800 Fuel 2470 65 U 2015 455 U 1950 Maintenance 2280 55 U 2215 65 U 2160 Ground facility expenses 1680 15 U 1715 35 F 1700 Admininstration 3440 10 U 3530 90 F 3520 Total expense 24700 630 U 24510 190 U 23880 Net Operating Income 12220 570 F 12690 470 U 12120 *Flexible budget variance = Flexible budget - Actual results *Activity Variance = Planning budet - Flexible budget *Calculation: Flexible budget Lessons 155 Revenue (240*155) Expneses: Instructor wages (65*155) Aircraft depreciation (32*155) Fuel (13*155) Maintenance 510+(11*155) Ground facility expenses 1250+(3*155) Admininstration 3220+(2*155)