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 $3,800 per month plus $45 per course plus $6 per student. The company's sales should average $860 per student. The actual operating results for September appear below: Required: 1. 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. The school actually ran four courses with a total of 59 students in September. Complete the company's flexible budget for this level of activity. 3. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for September.

Explanation / Answer

The Gourmand Cooking School Planning Budget   for the month ended Sep 30. Planning Budget Details Cost Formula No Of course No Of Student Amt $ Cost /revenue details Fixed Cost per course Cost per student                  4               63 Sales revenue              860      54,180 Instructor Wages            2,940      11,760 Classroom Supplies              300      18,900 Utilities             1,220                  60        1,460 Campus Rent             4,600        4,600 Insurance             2,100        2,100 admin Expenses             3,800                  45                   6        4,358 Total Expenses      43,178 Net Operating Income      11,002 The Gourmand Cooking School Actual result   Activity Variance =Planning -Flixible Budget F/U revenue & Spening Variance =Flixible budget -Actuals F/U Flexible Budget & Variances   for the month ended Sep 30. Flexible budget Details Cost Formula No Of course No Of Student Amt $ Cost /revenue details Fixed Cost per course Cost per student                  4               59 Sales revenue              860      50,740      51,280          3,440 U            540 F   Instructor Wages            2,940      11,760      11,040                 -              720 F Classroom Supplies              300      17,700      18,750          1,200 F           1,050 U Utilities             1,220                  60        1,460        1,870                 -              410 U Campus Rent             4,600        4,600        4,600                 -                  -   Insurance             2,100        2,100        2,240                 -              140 U admin Expenses             3,800                  45                   6        4,334        3,784                24 F            550 F Total Expenses      41,954      42,284          1,224 F            330 U Net Operating Income        8,786        8,996          2,216 U            210 U

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