Explore BrainMass
Share

Explore BrainMass

    Preparing a Flexible Budget Performance Report

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    See the attachment.
    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:
    TipTop Flight School
    Variance Report
    For the Month Ended July 31

    Planning
    Budget Actual
    Results Variances

    Lessons 142 167
    Revenue $29,252 $45,200 $15,948 F

    Expenses:
    Instructor wages 9,230 10,650 1,420 U
    Aircraft depreciation 5,396 6,346 950 U
    Fuel 1,704 2,800 1,096 U
    Maintenance 2,216 2,640 424 U
    Ground facility expenses 1,806 1,420 386 F
    Administration 3,552 3,220 332 F

    Total expense

    23,904

    27,076

    3,172

    U

    Net operating income

    $5,348

    $18,124

    $12,776

    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 variance.

    The planning budget was developed using the following formulas, where q is the number of lessons sold:

    Cost Formulas
    Revenue $206q
    Instructor wages $65q
    Aircraft depreciation $38q
    Fuel $12q
    Maintenance $512 + $12q
    Ground facility expenses $1,380 + $3q
    Administration $3,410 + $1q

    Prepare a flexible budget performance report for the school for July. (Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.)
    TipTop Flight School
    Flexible Budget Performance Report
    For the Month Ended July 31
    Activity Variances Revenue and Spending Variances
    Revenue $

    $

    Expenses:
    Instructor wages

    Aircraft depreciation

    Fuel

    Maintenance

    Ground facility expenses

    Administration

    Total expense

    Net operating income $

    $

    © BrainMass Inc. brainmass.com October 10, 2019, 2:33 am ad1c9bdddf
    https://brainmass.com/business/accounting/preparing-flexible-budget-performance-report-382589

    Attachments

    Solution Summary

    The solution prepares a flexible budget performance report.

    $2.19