PROBLEM 9-22 Critique a Report; Prepare a Performance Report LO9-1, LO9-2, L09-3, 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 150 155 Lessons $900 F $33.000 $33,900 Revenue Expenses: Instructor wages 120 U 9,750 5,700 2,250 2,330 9,870 190 U 5,890 2,750 2,450 Aircraft depreciation 500 U Fuel. 120 U Maintenance 10 F 1,550 Ground facility expenses 1,540 70 F 3,390 3,320 Administration 850 U 25,820 24,970 Total expense $ 8,080 $ 50 F $ 8,030 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 $220q $65q $38q Instructor wages Aircraft depreciation Fuel $15q $530+$12q $1,250 + $2q $3,240+$1q Maintenance Ground facility expenses Administration. Required: Should the owner feel frustrated with the variance reports? Explain. 1. Using Exhibit 9-8 as your guide, prepare a flexible budget performance report for the school. for July 3. 2 Evaluate the school's performance for July