PROBLEM 9-22 Critique a Report; Prepare a Performance Report LO9-1, LO9-2, LO9-3, LO9-4, L09-6 (TipTop Flighe 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 Planning Results Budget Variances 155 150 Lessons $33,900 $33,000 $900 F Revenue Expenses: Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration 9,870 5,890 2,750 2,450 1,540 3,320 9,750 5,700 2,250 2,330 1,550 3,390 120 U 190 U 500 U 120 U 10 F 70 F Total expense 24,970 850 U 25,820 $ 8,080 Net operating income $ 8,030 $ 50 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 Instructor wages Aircraft depreciation Fuel .. Maintenance Ground facility expenses Administration. $2209 $659 $389 $159 $530 + $129 $1,250 + $29 $3,240 + $19 Required: 1. Should the owner feel frustrated with the variance reports? Explain. 2. Using Exhibit 98 as your guide, prepare a flexible budget performance report for the school for July. 3. Evaluate the school's performance for July