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 50 students enrolled in those two courses. Data conoerning the company's cost formulas appear beloww Fxed Cost Cost per Cost per per Month Course Student Instructor wages 5260 Utilites Campus rent Insuranoe Administrative expenses S3,270 S 15 S 4 S 870 S 130 S 4,200 S 1,890 For example, administrative expenses should be 53,270 per month plus $15 per course plus 54 per student. The company's sales should average 5800 per student. The actual operating results for September appear below: Revenue Instructor wages Classroom s Utilities Campus rent Insurance 5 32,400 5 9,080 S 8,540 S 1,530 S 4,200 S 1,890 S 3,790 Required 1. The Goumand Cooking School expects to run three courses with a total of 45 students in September Complete the company's planning budgetfor this level of activity. Planning Budget For the Month Ended September 30 Revenue Instructor wages Classroom supplies Campus rent Total expense Net operating income

Explanation / Answer

1 Planning Budget Revenue 36000 Expenses: Instructor wages 9240 Classroom supplies 11700 Utilities 1260 Campus rent 4200 Insurance 1890 Administrative expenses 3495 Total expense 31785 Net operating income 4215 2 Flexible Budget Revenue 33600 Expenses: Instructor wages 9240 Classroom supplies 10920 Utilities 1260 Campus rent 4200 Insurance 1890 Administrative expenses 3483 Total expense 30993 Net operating income 2607 3 Revenue and spending variances Revenue 1200 U Expenses: Instructor wages 160 F Classroom supplies 2380 F Utilities 270 U Campus rent 0 None Insurance 0 None Administrative expenses 307 U Total expense 1963 F Net operating income 763 F

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