Week 5: Homework 3
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After several months of using these 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:
Revenue
Instructor wages
Aircraft
depreciation
Fuel
Maintenance
Ground facility
expenses
Administration
Cost
Formulas
$210q
$50q
$36q
$11q
$530 + $8q
$1,350 +
$2q
$3,260 +
$1q
Required:
2. Complete the flexible budget performance report for the school for July. (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.)
Lessons
Revenue
Expenses:
Instructor wages
Aircraft depreciation
Fuel
Maintenance
Ground facility
expenses
Administration
Total expense
Net operating income
TipTop Flight School
Flexible Budget Performance Report
For the Month Ended July 31
Actual
Flexible
Results
Budget
175
$
36,640
Planning
Budget
170
$ 35,700
8,640
8,500
6,300
6,120
2,410
2,030
1,870
1,890
1,660
1,690
3,340
24,380
$
12,260
3,430
23,500
$ 12,200
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