Question

Exercise 9-18 (Algo) Working with More Than One Cost Driver (LO9-2, LO9-3, LO9-4, LO9-5) 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 Cost per Cost per per Month Course Student $ 2,920 $260 $ 1,210 $ 80 $ 5,100 $ 2,300 $ 3,800 $ 41 $ 4 For example, administrative expenses should be $3,800 per month plus $41 per course plus $4 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 55 students. The actual operating results for September appear below:

Answer 1

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Gourmand Cooking School
Flexible Budget Report
For the month ended September 30
	Workings:	Actual results	Revenue and Spending Variances		Flexible Budget	Activity Variance		Planning Budget
Courses	x	4			4			4
Students	y	55			55			61
Revenue	($870* y)	$     50,170	$         2,320	F	$    47,850	$     5,220	U	$    53,070
Expenses:
Instructor wages	($2920* x)	$     10,960	$            720	F	$    11,680	$            -	None	$    11,680
Classroom supplies	($260* y)	$     15,710	$         1,410	U	$    14,300	$     1,560	F	$    15,860
Utilities	($1210 + $80 * x)	$       1,940	$            410	U	$      1,530	$            -	None	$      1,530
Campus rent	$                    5,100	$       5,100	$                -	None	$      5,100	$            -	None	$      5,100
Insurance	$                    2,300	$       2,440	$            140	U	$      2,300	$            -	None	$      2,300
Administrative expenses	[$3800 + ($41 * x) + ($4 * y)]	$       3,634	$            550	F	$      4,184	$           24	F	$      4,208
Total expenses		$     39,784	$            690	U	$    39,094	$     1,584	F	$    40,678
Net operating income		$     10,386	$         1,630	F	$      8,756	$     3,636	U	$    12,392