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A B D F 27 1) 20 Insurance Expense 1,500 21 Cost of Goods Sold of 45% of Revenues 22 Sales Commissions of 8% of Revenues will be paid 23 24 ) Using the above data, complete the Projected Operating Budget in the table below. 25 2) Provide a flexible budget for the same projected period forecasting that revenues will be 25% higher than expected. 26 2) 28 ABC CHARITY ABC CHARITY 29 Projected Operating Report Flexible Operating Report 30 For the Month of September, 2020 For the Month of September, 2020 31 32 Revenue Revenue 33 Vanable Expenses Variable Expenses 34 IS 35 36 37 38 Total Variable Expenses Total Variable 39 Fixed Expenses Fixed Expenses
35 - 36 37 38 Total Variable Expenses 39 Fixed Expenses 40 Total Variable Fixed Expenses 41 42 43 44 Total Fixed Expenses IS Total Fixed Expenses 45 Net Income $ Net Income 46 47 48 49 Part B. (36 MARKS) 50 51 Tip Top Flight School offers flying lessons. The school's owner and manager has been attempting to evaluate 52 performance and control costs using a variance report that compares the planning budget to actual results. 53 A recent variance report is shown below. The owner is frustrated, as she is quite confident that Instructor Wages were very 54 tightly controlled in July, but the report shows an unfavourable variance.
HOW Variance Actual Results 155 Planning Budget 150 Variances 33.900 55 56 Tip Top Flight School 57 Variance Report 58 For the Month Ended July 31 59 60 61 62 of Lessons 63 64 Revenue 65 Expenses: 66 Instructor Wages 67 Alrcraft Depreciation 68 Fuel 69 Maintenance 70 Ground Facility Expenses 71 Administration 72 Total Expenses 73 Net Operating Income 74 33.000 900 F 9,870 5,890 2,750 2,450 1,540 3.320 25,820 8.080 9,750 5,700 2.250 2,330 1,550 3.390 24.970 8.030 120 U 190 U 500U 1200 10 F ZOF 850 U SOF Sheet1 Sheet2 Sheet READY
D 25 76 The planning budget was developed using the following formulas where is the number of lessons sold. 72 7B Cost Formulas 79 Revenue $2209 80 Instructor Wages $659 81 Aircraft Depreciation $389 82 Fuel 83 Maintenance $530+$124 84 Ground Facility Expenses $1,250 + $24 85 Administration $3,240 + Sla 86 87 1) Should the owner feel frustrated with the variance reports? Explain. 88 2) Using the format provided below, prepare a flexible budget performance report for the school for July. 89 3) Evaluate the school's performance for July. $159 (3 Marks) (27 Marks) (6 Marks) 90 91 92 Tip Top Flight School 93 Variance Report 94 For the Month Ended July 31 95
010 3 C D 94 For the Month Ended July 31 95 96 37 Actual Results Revenue and Spending Fis Favourable Variances U is Unfavoural Flexible Budget Activity is favourable Variances Us Unfavourable Planning Budget 99 100 # of lessons 101 102 Revenue 03 Expenses 104 Instructor Wages Los Aircraft Depreciation 06 Fuel 07 Maintenance 8 Ground Facility Expenses 09 Administration 10 Total Expenses Net Operating Income 2 3 4