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 64 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 $890 per student.

The Gourmand Cooking School expects to run four courses with a total of 64 students in September. Complete the company’s planning budget for this level of activity.

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 64 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

Explanation / Answer

Actual Revenue and spending variances Flexible budget Activity variances Planning budget Courses 4 4 4 Students 58 60 64 Revenue 54060 660 F 53400 3560 U 56960 Expenses: Instructor wages 11200 720 F 11920 0 None 11920 Classroom supplies 16490 890 U 15600 1040 F 16640 Utilities 1930 410 U 1520 0 None 1520 Campus rent 4700 0 None 4700 0 None 4700 Insurance 2240 140 U 2100 0 None 2100 Administrative expenses 3790 550 F 4340 24 F 4364 Total expenses 40350 170 U 40180 1064 F 41244 Net operating income 13710 490 F 13220 2496 U 15716 Note: All 3 parts have been solved together

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