Question

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers 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 63 students enrolled in those two courses. Data concerning the company's cost formulas appear below Fixed Cost Cost per Cost per Student per Month Course 2,920 Instructor wages Classroom supplies Utilities $270 $1,230 $ 5,100 $2,000 3,800 50 Campus rent Insurance Administrative expenses 40 6 For example, administrative expenses should be $3,800 per month plus $40 per course plus $6 per student. The company's sales should average $850 per student. The company planned to run four courses with a total of 63 students; however, it actually ran four courses with a total of only 61 students. The actual operating results for September appear below Actual 50,650 10,960 $ 16,860 1,840 $ 5,10e $2,140 3,764 Revenue Instructor wages classroom supplies Utilities Campus rent Insurance Administrative expenses Required: 1. Prepare the company's planning budget for September. 2. Prepare the company's flexible budget for September. 3. Calculate the revenue and spending variances for September. Complete this question by entering your answers in the tabs below. Required 1 Required 3 Required 2 Prepare the company's planning budget for September. 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

Answer 1

Answer-1)-

GOURMAND COOKING SCHOOL
PLANNING BUDGET
For the month ended September
Particulars		Flexible Budget
		$
Revenue	63 students*$850 per student	53550
Less:-Expenses
Instructor wages	4 courses*$2920 per course	11680
Classroom supplies	63 students*$270 per student	17010
Utilities	(4 courses*$50 per course)+$1230	1430
Campus rent		5100
Insurance		2000
Administrative expenses	(4 courses*$40 per course)+(63 students*$6 per student)+$3800	4338
Total Expenses		41558
Income from operations		11992

2)-

GOURMAND COOKING SCHOOL
FLEXIBLE BUDGET
For the month ended September
Particulars		Flexible Budget
		$
Revenue	61 students*$850 per student	51850
Less:-Expenses
Instructor wages	4 courses*$2920 per course	11680
Classroom supplies	61 students*$270 per student	16470
Utilities	(4 courses*$50 per course)+$1230	1430
Campus rent		5100
Insurance		2000
Administrative expenses	(4 courses*$40 per course)+(61 students*$6 per student)+$3800	4326
Total Expenses		41006
Income from operations		10844

3)-

GOURMAND COOKING SCHOOL
Revenue & Spending Variances
For the month ended September
Particulars
	Flexible Budget	Actual Results	Variances	Remark
	$	$	$
Revenue	51850	50650	-1200	Unfavorable
Less:-Expenses
Instructor wages	11680	10960	720	Favorable
Classroom supplies	16470	16860	-390	Unfavorable
Utilities	1430	1840	-410	Unfavorable
Campus rent	5100	5100	0	None
Insurance	2000	2140	-140	Unfavorable
Administrative expenses	4326	3764	562	Favorable
Total Expenses	41006	40664	342	Favorable
Income from operations	10844	9986	-858	Unfavorable