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 62 students enrolled in those two courses. Deta conceming the company's cost formulas appeer below Fixed Cost Cost Cost per Month per Course Student $2,970 per Instructor vages Classroom supplies $290 $1,230 $ $5,000 $2,300 60 Utilities Campus rent Insurance Administrative 7 $4,000 44 expenses For example, administrative expenses should be $4,0000 per month plus $44 per course plus $7 per student. The company's sales should average $870 per student The company planned to run four courses with a total of 62 students; however, it actually ren four courses with a total of only 54 students. The actual operating results for September appear below Actual $51,040 $11,160 Classroom supplies $17,830 1,880 $ 5,000 $ 2,440 Revenue Instructor vages Utilities Campus rent Insurance Adninistrative 4,036 expenses Required: 1. Prepare the company's planning budget for September 2. Prepare the company's fexible budget for September 3. Calculate the revenue and spending variances for September Complete this question by entering your answers in the tabs below. Required Required Required 1 3 Prepare the company's planning budget for September. Gourmand Cooking School Planning Budget For the Month Ended September 30 Budgeted courses Actual students Revenue Expenses: Instructor wages Classroom supplies $ 53,940 11,880 Utilities Campus rent Insurance Administrative expenses Total expense 11,880 $ 42,060 Net operating income Required 2 > Required 1

requirement 2

requirement 3

Answer 1

1.planning budget Planning budg et d a+4*b+62*c for the month e nded september 30 fixed cost cost per stude nt Cost per course a C Budgeted Budgeted students 4 Courses 62 Revenue 870 53,940 Expenses 2,970 11,880 17,980 Instructor wages classroom supplies 290 Utilities 1,230 1,470 60 5,000 Campus rent 5,000 2,300 2,300 4,610 Insurance Administrative expenses 7 4,000 44 total expenses 43,240 10,700 net operating income 2.flexible budget for the month ended september 30 fixed cost Flexible budget d a+4*b+54*c cost per stude nt COst per Course b a C Actual courses 4 Actual students 54 Revenue 870 46,980 Expenses Instructor wages 2,970 11,880 dassroom supplies 15,660 290 Utilities 1,230 60 1,470 5,000 Campus rent 5,000 2,300 Insurance 2,300 Administrative expenses 4,554 4,000 44 7 total expenses 40,864 net operating income 6,116

|3.Revenue and spending varian ce for the month e nded september 30 Actual result Revenue and spending varian ce b a-c flexible budget a C 4 Courses 4 students 54 54 51040 Revenue 4060 F 46980 Expenses Instructor wages 11160 720 F 11880 Classroom supplies 17830 15660 2170 U Utilities 1880 1470 410 U Campus rent 5000 0None 5000 Insurance 2440 140 U 2300 4036 Administrative expenses 4554 518 F total expenses 42346 1482 U 40864 8694 net operating income 2578 F 6116