Question

The Gourmand Cooking School runs short cooking courses a small campus. Management has identified two cost drivers that it use
Required: 1. The Gourmand Cooking School expects to run four courses with a total of 61 students in September. Complete the c
2. The school actually ran four courses with a total of 55 students in September. Complete the companys flexible budget for
3. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for
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Answer #1
1
Planning Budget
For the month ended September 30
Revenue 53070 =61*870
Expenses:
Instructor wages 11680 =4*2920
Classroom supplies 15860 =61*260
Utilities 1450 =1250+(4*50)
Campus rent 5000
Insurance 2400
Administrative expenses 4055 =3700+(4*43)+(61*3)
Total expense 40445
Net operating income 12625
2
Flexible Budget
For the month ended September 30
Revenue 47850 =55*870
Expenses:
Instructor wages 11680 =4*2920
Classroom supplies 14300 =55*260
Utilities 1450 =1250+(4*50)
Campus rent 5000
Insurance 2400
Administrative expenses 4037 =3700+(4*43)+(55*3)
Total expense 38867
Net operating income 8983
3
Revenue and spending variance Activity variances
Revenue 2320 F 5220 U
Expenses:
Instructor wages 720 F 0 None
Classroom supplies 1410 U 1560 F
Utilities 410 U 0 None
Campus rent 0 None 0 None
Insurance 140 U 0 None
Administrative expenses 556 F 18 F
Total expense 684 U 1578 F
Net operating income 1636 F 3642 U
Workings for 3:
Actual results Revenue and spending variance Flexible budget Activity variances Planning Budget
Courses 4 4 4
Students 55 55 61
Revenue 50170 2320 F 47850 5220 U 53070
Expenses:
Instructor wages 10960 720 F 11680 0 None 11680
Classroom supplies 15710 1410 U 14300 1560 F 15860
Utilities 1860 410 U 1450 0 None 1450
Campus rent 5000 0 None 5000 0 None 5000
Insurance 2540 140 U 2400 0 None 2400
Administrative expenses 3481 556 F 4037 18 F 4055
Total expense 39551 684 U 38867 1578 F 40445
Net operating income 10619 1636 F 8983 3642 U 12625
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