The Gourmand Cooking School runs short cooking courses at its small campus. Mana
ID: 2570101 • 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 64 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:
For example, administrative expenses should be $3,500 per month plus $46 per course plus $4 per student. The company’s sales should average $860 per student.
The actual operating results for September appear below:
Required:
1. 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.
2. The school actually ran four courses with a total of 54 students in September. Complete the company’s flexible budget for this level of activity.
3. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Fixed Cost per Month Cost per Course Cost perStudent Instructor wages $ 2,920 Classroom supplies $ 290 Utilities $ 1,240 $ 75 Campus rent $ 4,500 Insurance $ 2,100 Administrative expenses $ 3,500 $ 46 $ 4
Explanation / Answer
1)
b)
3)
Planning Budget Revenue [64*860] 55040 less:Expenses Instructor wages 11680 [2920*4] classroom supplies 18560 [64*290] utilites 1540 [(75*4)+1240] campus rent 4500 Insurance 2100 Administration 3940 [(46*4)+(4*64)+3500] Total expense 42320 Net income 12720Related Questions
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