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: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Fixed Cost per Cost per cost per Month Course Student $ 2,940 $ 260 $1,240 $ 55 $4,600 $2,300 $3,500 $ 41 $ 4 For example, administrative expenses should be $3,500 per month plus $41 per course plus $4 per student. The company's sales should average $880 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: Revenue Instructor wages classroom supplies Utilities Campus rent Insurance Administrative expenses Actual $ 50, 780 $ 11,040 $ 15,710 $ 1,870 $ 4,600 $ 2,440 $ 3,334

Answer 1

Answer

	Actual Results	Spending Variances		Flexible Budget	Activity Variances		Planning Budget
Courses	4			4			4
Students	57			57			61
Revenues	$                 50,780.00	$                620.00	Favourable	$        50,160.00	$           3,520.00	Unfavourable	$        53,680.00
Expenses:
Instructer Wages	$                 11,040.00	$                720.00	Favourable	$        11,760.00	$                        -	None	$        11,760.00
Classroom supplies	$                 15,710.00	$                890.00	Unfavourable	$        14,820.00	$           1,040.00	Favourable	$        15,860.00
Utilities	$                   1,870.00	$                410.00	Unfavourable	$          1,460.00	$                        -	None	$          1,460.00
Campus Rent	$                   4,600.00	$                         -	None	$          4,600.00	$                        -	None	$          4,600.00
Insurance	$                   2,440.00	$                140.00	Unfavourable	$          2,300.00	$                        -	None	$          2,300.00
Administrative expenses	$                   3,334.00	$                558.00	Favourable	$          3,892.00	$                 16.00	Favourable	$          3,908.00
Total Expenses	$                 38,994.00	$                162.00	Unfavourable	$        38,832.00	$          1,056.00	Favourable	$        39,888.00
Net Operating Income	$                 11,786.00	$                458.00	Favourable	$        11,328.00	$           2,464.00	Unfavourable	$        13,792.00

--Working

	Actual Results	Flexible Budget	Planning Budget
Courses	4	4	4
Students	57	57	61
Revenues	50780	=57*880	=61*880
Expenses:
Instructer Wages	11040	=4*2940	=4*2940
Classroom supplies	15710	=57*260	=61*260
Utilities	1870	=1240+(4*55)	=1240+(4*55)
Campus Rent	4600	4600	4600
Insurance	2440	2300	2300
Administrative expenses	3334	=3500+(4*41)+(57*4)	=3500+(4*41)+(61*4)