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 61 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 Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses $ 3,900 $ 42 $ 4 $2,980 $300 $ 1,250 $ 4,800 $ 2,300 $ 70 For example, administrative expenses should be $3,900 per month plus $42 per course plus $4 per student. The company's sales should average $890 per student. The actual operating results for September appear below Revenue Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Actual $ 51,390 $11,200 $ 18,150 $ 1,940 $ 4,800 $ 2,440 $ 3,738 Required 1. The Gourmand Cooking School expects to run four courses with a total of 61 students in September Complete the company's planning budget for this level of activity Gourmand Cooking School Planning Budget For the Month Ended September 30 Revenue Expenses Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Total expense Net operating income

Explanation / Answer

1 Planning Budget Revenue 54290 Expenses: Instructor wages 11920 Classroom supplies 18300 Utilities 1530 Campus rent 4800 Insurance 2300 Administrative expenses 4312 Total expense 43162 Net operating income 11128 2 Flexible Budget Revenue 50730 Expenses: Instructor wages 11920 Classroom supplies 17100 Utilities 1530 Campus rent 4800 Insurance 2300 Administrative expenses 4296 Total expense 41946 Net operating income 8784 3 Revenue and spending variances Revenue 660 F Expenses: Instructor wages 720 F Classroom supplies 1050 U Utilities 410 U Campus rent 0 None Insurance 140 U Administrative expenses 558 F Total expense 322 U Net operating income 338 F

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