The Gourmand Cooking School runs short cooking courses at its small campus. Mana

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. Data concerning the company's cost formulas appear below: Fixed Cost per Cost per Cost per Mont tudent Instructor wages Claasroom supplier Utilities Campus rent Insurance Administrative expenses 2,940 $290 $1,230 $ 60 $4,700 $2,300 3,700 $ 45 6 For example, administrative expenses should be $3,700 per month plus $45 per course plus $6 per student. The company's sales should average $900 per student. The company planned to run four courses with a total of 62 students; however, it actually ran four courses with a total of only 60 students. The actual operating results for September appear below: Revenue Instructor wages Classroom supplies Utilities Canpus rent Insurance Adninistrative expenses Actual 52,900 $11,040 $ 17,830 s 1,880 $ 4,700 s 2,440 S 3,678

Explanation / Answer

The flexible budget performance report is provided as below:

Gourmand Cooking School Flexible Budget Performance Report For the Month Ended September 30 Actual Results Revenue and Spending Variances Flexible Budget Activity Variances Planning Budget Courses 4 4 4 Students 60 60 62 Revenue 52,900 1,100 U 54,000 (900*60) 1,800 U 55,800 (900*62) Expenses: Instructor's Wages 11,040 720 F 11,760 (2,940*4) 0 None 11,760 (2,940*4) Classroom Supplies 17,830 430 U 17,400 (290*60) 580 F 17,980 (290*62) Utilities 1,880 410 U 1,470 (1,230 + 60*4) 0 None 1,470 (1,230 + 60*4) Campus Rent 4,700 0 None 4,700 0 None 4,700 Insurance 2,440 140 U 2,300 0 None 2,300 Administrative Expenses 3,678 562 F 4,240 (3,700 + 45*4 + 6*60) 12 F 4,252 (3,700 + 45*4 + 6*62) Total Expense 41,568 302 F 41,870 592 F 42,462 Net Operating Income $11,332 798 U $12,130 1,208 U $13,338

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