Should the owner feel frustrated with the variance reports

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Reference no: EM13962765

Wings 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:

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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 August, 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 . . . . . . . . . . . . . . . . . . . . . . . $225q
Instructor wages . . . . . . . . . . . . . . . . . $62q
Aircraft depreciation . . . . . . . . . . . . . $57q
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . $21q
Maintenance . . . . . . . . . . . . . . . . . . . $670 + $13q
Ground facility expenses . . . . . . . . . . $1,640 + $4q
Administration. . . . . . . . . . . . . . . . . . $4,210 + $1q

Required: 

1. Should the owner feel frustrated with the variance reports? Explain. 
2. Prepare a flexible budget performance report for the school for August. 
3. Evaluate the school's performance for August. 

Reference no: EM13962765

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