The Gourmand Cooking School runs short cooking courses at its small campus. Management has identi…

 
   

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The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that 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. Data concerning the company’s cost formulas appear below:

   

Fixed Cost per Month

Cost per Course

Cost per
Student

  Instructor wages

$

2,910

  Classroom supplies

  

$

300   

  Utilities

$

1,240   

$

85

  Campus rent

$

5,000   

  Insurance

$

2,300   

   

  Administrative expenses

$

3,800   

$

45

$

4   

  

For example, administrative expenses should be $3,800 per month plus $45 per course plus $4 per student. The company’s sales should average $890 per student.

  

    The actual operating results for September appear below:

  

Actual

  Revenue

$

52,280

  Instructor wages

$

10,920

  Classroom supplies

$

18,450

  Utilities

$

1,990

  Campus rent

$

5,000

  Insurance

$

2,440

  Administrative expenses

$

3,654

  

Required:

1.

The Gourmand Cooking School expects to run four courses with a total of 62 students in September. Complete the company’s planning budget for this level of activity.

      
  

2.

The school actually ran four courses with a total of 58 students in September. Complete the company’s flexible budget for this level of activity.

      
  

3.

Complete the 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 variance). Input all amounts as positive values.)

     

rev: 08_05_2014_QC_51911, 08_28_2014_QC_5191