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 61 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Instructor wages classroom supplies Utilities Campus rent Insurance Administrative expenses Fixed Cost per Cost per Cost per Month Course Student $ 2,950 $ 270 $1,210 $ 85 $5,200 $2,400 $3,800 $ 45 $ 6 For example, administrative expenses should be $3,800 per month plus $45 per course plus $6 per student. The company's sales should average $870 per student. The company planned to run four courses with a total of 61 students; however, it actually ran four courses with a total of only 59 students. The actual operating results for September appear below: Revenue Instructor wages classroom supplies Utilities Campus rent Insurance Administrative expenses Actual $ 50, 170 $ 11,080 $ 16, 320 $ 1,960 $ 5,200 $ 2,540 $ 3,772 Required: Prepare a 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.)

Answer 1

solution: Revenue and spending variance for the month ended september 30 flexible budget* | Actual result Revenue and spending variance b=a-c 41 Activity variance Planning budget* d=c-e 4 61 Courses students 59 59 50170 1160 U 51330 1740U 53070 720 F 390 U Revenue Expenses : Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses total expenses net operating income 11080 16320 1960 5200 2540 3772 40872 9298 410U o None 140 U 562 F 342 F 818 U 11800 0 None 15930 540 F 1550 0 None 52000 None 2400 0 None 4334 12 F 41214 552 F 10116 1188 U 11800 16470 1550 5200 2400 4346 41766 11304

*working: 1.planning budget for the month ended september 30 fixed cost cost per course cost per student Planning budget d=a+4*b+61*c Budgeted courses Budgeted students 61 870 53,070 2,950 85 Revenue Expenses : Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses total expenses net operating income 1,210 5,200 2,400 3,800 11,800 16,470 1,550 5,200 2,400 4,346 41,766 11,304 45 2.flexible budget for the month ended september 30 fixed cost cost per course cost per student Flexible budget d=a+4*b+59*c Actual courses Actual students 59 870 51,330 2,950 270 85 Revenue Expenses : Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses total expenses net operating income 1,210 5,200 2,400 3,800 11,800 15,930 1,550 5,200 2,400 4,334 41,214 10,116 45