The Gourmand Cooking School runs short cooking courses at its small campus. Mana

Question

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 63 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

   

  

For example, administrative expenses should be $3,700 per month plus $42 per course plus $3 per student. The company’s sales should average $890 per student.

  

  

  

The Gourmand Cooking School expects to run four courses with a total of 63 students in September. Complete the company’s planning budget for this level of activity.

2.The school actually ran four courses with a total of 55 students in September. Complete the company’s flexible budget for this level of activity.

Complete the flexible budget performance report that shows both revenue and spending variances
and activity variances for September. (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.)

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 63 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

Explanation / Answer

Answer:

1.

2)

3)

Planning Budget For the month ended october 31 In$ Fixed Cost Variable Cost Planning Budget No of courses 4 No of students enrolled 63 Revenue (63*$890) 56070 Expenses: Instructor wages ($2,980*4) =11,920 11920 Classroom supplies ($270*63)=17010 17010 Utilities 1220 ($90*4) = 360 1580 Campus Rent 4600 4600 Insurance 2200 2200 Administrative expenses 3700 ($42*4+$3*63) 4057 Total Expenses 41367 Net operating income 14703

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