Problem 9-22 Critique a Report; Prepare a Performance Report [LO9-1, LO9-2, LO9-3, LO9-4, LO9-6] 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 Actual Planning Budget Variances Results Lessons 180 175 $ 41,290 $ 40,250 $1,040 F Revenue Expenses: 145 U Instructor wages Aircraft depreciation 10,645 6,840 3,090 2,700 10,500 6,650 190 U 2,450 2,555 Fuel 640 U Maintenance 145 U 2,470 3,885 29,630 $ 11,660 $ 11,560 $ Ground facility expenses 80 F 2,550 Administration 3,985 100 F Total expense 28,690 940 U 100 F 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: 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 $230q $60q $38q $14q $630 $11q $1,850 $4q $3,460 $3q Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration kequirea 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 Flexible Budget Actual Planning Activity Variances Budget Results Lessons 180 175 F 41,290 U Revenue 40,250 Expenses F U Instructor wages 10,645 10,500 ONone U Aircraft depreciation 6,840 6,650 U U Fuel 3,090 2,450 U U Maintenance 2,700 2,555 F U Ground facility expenses 2,470 2,550 F U Administration 3,885 3,985 Total expense 29,630 28,690 11,660 11,560 Net operating income