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: Fixed Cost per Cost per Cont per Month Course Student Instructor vages classroom supPplies Utilities $2,980 $300 $1,210 $4,800 $2,400 $3,700 50 Campus rent Insurance Administrative expenses 43 4 For example, administrative expenses should be $3,700 per month plus $43 per course plus $4 per student. The company's sales should average $900 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 57 students. The actual operating results for September appear below Actual $52,000 $ 11,200 $ 18,150 $ 1,820 $ 4,800 S 2,540 S 3,542 Revenue Instructor wages classroom supPplies Utilities Campus rent Insurance Administrative expenses 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

Answer 1

		Actual	Revenue & spending		Flexible	Activity variance		planning
		Results	Variance		budget			budget
Courses		4			4			4
Students		57			57			61
Revenues		52,000	700	F	51300	3600	U	54900
Expenses
Instructor wages		11,200	720	F	11920	0	N	11920
Classroom supplies		18,150	1,050	U	17100	1200	F	18300
Utilities		1,820	410	U	1410	0	N	1410
Campus rent		4,800	0	N	4,800	0	N	4,800
insurance		2,540	140	U	2,400	0	N	2,400
Administrative expenses		3,542	558	F	4100	16	F	4116
total expense		42,052	322	U	41730	1216	F	42946
net operating income		9,948	378	F	9570	2384	U	11954