The Gourmand Cooking School runs short cooking courses at its small campus. Mana
ID: 2488555 • 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 60 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 $43 per course plus $5 per student. The company’s sales should average $870 per student.
Student Instructor wages $ 2,920 Classroom supplies $ 310 Utilities $ 1,210 $ 70 Campus rent $ 4,600 Insurance $ 2,200 Administrative expenses $ 3,700 $ 43 $ 5
Explanation / Answer
Gourmand Cooking School
Flexible budget performance report
For the Month Ended September 30
Actual Results
Revenue and Spending Variances
Flexible Budget
Activity Variances
Planning Budget
Budgeted courses (q1)
4
4
4
Budgeted students (q2)
58
58
60
Revenue ($870q2)
$ 49,300
$ 1,160
U
$ 50,460
$ 1,740
U
$ 52,200
Expenses:
Instructor wages ($2,920q1)
$ 10,960
$ 720
F
$ 11,680
$ 0
$ 11,680
Classroom supplies ($310q2)
$ 18,450
$ 470
U
$ 17,980
$ 620
F
$ 18,600
Utilities ($1,210 + $70q1)
$ 1,900
$ 410
U
$ 1,490
$ 0
$ 1,490
Campus rent ($4,600)
$ 4,600
$ 0
$ 4,600
$ 0
$ 4,600
Insurance ($2,200)
$ 2,340
$ 140
U
$ 2,200
$ 0
$ 2,200
Administrative expenses ($3,700 + $43q1 +$5q2)
$ 3,598
$ 564
F
$ 4,162
$ 10
F
$ 4,172
Total expense
$ 41,848
$ 264
F
$ 42,112
$ 630
F
$ 42,742
Net operating income
$ 7,452
$ 896
U
$ 8,348
$ 1,110
U
$ 9,458
Gourmand Cooking School
Flexible budget performance report
For the Month Ended September 30
Actual Results
Revenue and Spending Variances
Flexible Budget
Activity Variances
Planning Budget
Budgeted courses (q1)
4
4
4
Budgeted students (q2)
58
58
60
Revenue ($870q2)
$ 49,300
$ 1,160
U
$ 50,460
$ 1,740
U
$ 52,200
Expenses:
Instructor wages ($2,920q1)
$ 10,960
$ 720
F
$ 11,680
$ 0
$ 11,680
Classroom supplies ($310q2)
$ 18,450
$ 470
U
$ 17,980
$ 620
F
$ 18,600
Utilities ($1,210 + $70q1)
$ 1,900
$ 410
U
$ 1,490
$ 0
$ 1,490
Campus rent ($4,600)
$ 4,600
$ 0
$ 4,600
$ 0
$ 4,600
Insurance ($2,200)
$ 2,340
$ 140
U
$ 2,200
$ 0
$ 2,200
Administrative expenses ($3,700 + $43q1 +$5q2)
$ 3,598
$ 564
F
$ 4,162
$ 10
F
$ 4,172
Total expense
$ 41,848
$ 264
F
$ 42,112
$ 630
F
$ 42,742
Net operating income
$ 7,452
$ 896
U
$ 8,348
$ 1,110
U
$ 9,458
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