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Preparing a Flexible Budget Performance Report

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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

Budget Actual
Results Variances

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

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





Net operating income





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 $


Instructor wages

Aircraft depreciation



Ground facility expenses


Total expense

Net operating income $


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