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 65 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Fixed Cost per Cost per Cost per Course $2,950 Month Student Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses $270 $1,210$75 $4,900 $2,100 $3,800 $44 For example, administrative expenses should be $3,800 per month plus $44 per course plus $3 per student. The company's sales should average $860 per student. The company planned to run four courses with a total of 65 students; however, it actually ran four courses with a total of only 59 students. The actual operating results for September appear below: Revenue Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Actual $53,000 $ 11,080 $17,400 $ 1,920 $ 4,900 $ 2,240 $ 3,597

Explanation / Answer

Actual Revenue and spending variances Flexible budget Activity variances Planning budget Courses 4 4 4 Students 59 59 65 Revenue 53000 2260 F 50740 5160 U 55900 Expenses: Instructor wages 11080 720 F 11800 0 None 11800 Classroom supplies 17400 1470 U 15930 1620 F 17550 Utilities 1920 410 U 1510 0 None 1510 Campus rent 4900 0 None 4900 0 None 4900 Insurance 2240 140 U 2100 0 None 2100 Administrative expenses 3597 556 F 4153 18 F 4171 Total expenses 41137 744 U 40393 1638 F 42031 Net operating income 11863 1516 F 10347 3522 U 13869

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