The Toque Cooking Academy runs short cooking courses at its small campus. Manage

Question

The Toque Cooking Academy 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 four courses in a month and have a total of 62 students enrolled in those four courses. Data concerning the company's cost formulas appear below: For example, administrative expenses should be $3,800 per month plus $42 per course plus $4 per student. The company's sales should average $890 per student. The actual operating results for October appear below: The Toque Cooking Academy expects to run four courses with a total of 62 students in October. Complete the company's planning budget for this level of activity. The school actually ran four courses with a total of 60 students in October. Complete the company's flexible budget for this level of activity. Complete the flexible budget performance report that shows both activity variances and revenue and spending variances for October (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.)

Explanation / Answer

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Planning Budget For the month ended october 31 In$ Fixed Cost Variable Cost Planning Budget No of courses 4 No of students enrolled 62 Revenue (62*$890) 55180 Expenses: Instructor wages ($2,930*4) = 11,720 11720 Classroom supplies ($300*62)=18600 18600 Utilities 1210 ($70*4) = 280 1490 Campus Rent 5100 5100 Insurance 2100 2100 Administrative expenses 3800 ($42*4+$4*62) 4216 Total Expenses 43226 Net operating income 11954

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