Problem 10-21 Critique a Report; Prepare a Performance Report [LO10-1, LO10-4, LO10-6] Tip Top 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 Actual Results 175 $ 39,240 Variances Planning Budget 170 $ 38,250 $ 990 F Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income 11,080 6,475 3,670 3,010 2,235 4,265 30,735 8,505 10,880 6,290 3,230 2,870 2,330 4,360 29,960 8,290 200 U 185 U 440 U 140 U 95 F 95 F 775 U 215 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 is the number of lessons sold: Cost Formulas $2259 $649 Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration $379 $199 $ 660 + $139 $1,650 + $49 $4,190 + $19 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.) Tip Top Flight School Flexible Budget Performance Report For the Month Ended July 31 Revenue and Spending Variances Activity Variances Lessons Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income