Question

Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September:

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 64 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Fixed Cost Cost per per Month Course $ 2,910 Cost per Student $ 290 $ 70 Instructor wages classroom supplies Utilities Campus rent Insurance Administrative expenses $ 1,240 $ 4,700 $ 2,100 $ 3,700 $ 41 $ 6 For example, administrative expenses should be $3,700 per month plus $41 per course plus $6 per student. The company's sales should average $880 per student. The company planned to run four courses with a total of 64 students; however, it actually ran four courses with a total of only 58 students. The actual operating results for September appear below: Revenue Instructor wages classroom supplies Utilities Campus rent Insurance Administrative expenses Actual $ 53, 420 $ 10,920 $ 18,410 $ 1,930 $ 4,700 $ 2,240 $ 3,674

Answer 1

		Actual	Revenue & spending		Flexible	Activity variance		planning
		Results	Variance		budget			budget
Courses		4			4			4
Students		58			58			64
Revenues		53,420	2,380	F	51040	5280	U	56320
Expenses
Instructor wages		10,920	720	F	11640	0	N	11640
Classroom supplies		18,410	1,590	U	16820	1740	F	18560
Utilities		1,930	410	U	1520	0	N	1520
Campus rent		4,700	0	N	4,700	0	N	4,700
insurance		2,240	140	U	2,100	0	N	2,100
Administrative expenses		3,674	538	F	4212	36	F	4248
total expense		41,874	882	U	40992	1776	F	42768
net operating income		11,546	1,498	F	10048	3504	U	13552