The Gourmand Cooking School runs short cooking courses at its small campus. Mana
ID: 2463751 • Letter: T
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 62 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:
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 62 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:
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 62 students enrolled in those two courses. Data concerning the company's cost formulas appear below Fixed Cost Cost per Cost per per Month Course Student $2,900 Instructor wages Classroom supplies Utilities Campus rent nsurance Administrative expenses 3,700 $ 45 $ 5 $280 $ 1,230 $ 65 $5,000 $ 2,000 For example, administrative expenses should be $3,700 per month plus $45 per course plus $5 per student. The company's sales should average $860 per student. The actual operating results for September appear below: Revenue Instructor wages Classroom supplies Utilities Campus rent nsurance Administrative expenses Actual $ 50,420 $10,880 $17,210 $ 1,900 $ 5,000 $ 2,140 $ 3,616Explanation / Answer
1) Planning Budget for the month Ended September 30 Revenue 53320 Expenses: Instructor wages 11600 Classroom supplies 17360 Utilities 1490 Campus Rent 5,000 Insurance 2,000 Administrative expense 4190 total expense 41640 Net Operating income 11680 2) Flexible budget for the month Ended September 30 Revenue 49020 Expenses: Instructor wages 11600 Classroom supplies 14560 Utilities 1490 Campus Rent 5,000 Insurance 2,000 Administrative expense 4140 total expense 38790 Net Operating income 10230 Actual Revenue & spending Flexible Activity variance planning Results Variance budget budget Courses 4 4 4 Students 52 52 62 Revenues 50,420 1,400 F 49020 4300 U 53320 Expenses Instructor wages 10,880 720 F 11600 0 N 11600 Classroom supplies 17,210 2,650 U 14560 2800 F 17360 Utilities 1,900 410 U 1490 0 N 1490 Campus rent 5,000 0 N 5,000 0 N 5,000 insurance 2,140 140 U 2,000 0 N 2,000 Administrative expenses 3,616 524 F 4140 50 F 4190 total expense 40,746 1,956 U 38790 2850 F 41640 net operating income 9,674 556 U 10230 1450 U 11680
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