Exercise 9-18 Working with More Than One Cost Driver LO9-4, LO9-5 The Gourmand C

Question

Exercise 9-18 Working with More Than One Cost Driver LO9-4, LO9-5 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 63 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Fixed Cost Cost per Cost per per Month Course Student $2,910 Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses $ 4,000 $290 $ 1,240 $ 65 $ 4,700 2,300 44 S 5 For example, administrative expenses should be $4,000 per month plus $44 per course plus $5 per student. The company's sales should average $880 per student. The actual operating results for September appear below: Revenue Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Actual $52,540 $ 10,920 $18,120 $ 1,910 $ 4,700 $ 2,440 $ 3,917 Required 1. The Gourmand Cooking School expects to run four courses with a total of 63 students in September. Complete the company's planning budget for this level of activity Gourmand Cooking School Planning Budget For the Month Ended September 30 Revenue 55,440 Expenses Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses 11 ,6400 18,270 1,500 4700 2,300

Explanation / Answer

the correct answers to those marked wrong are:-

Revenue actual - flexible budget revenue

= 52,540 - 50,160

= 2,380(F)

2) total expenses

= 42,007 - 41,131

= 876(U)

the correct answers to those marked wrong are:-

Revenue actual - flexible budget revenue

= 52,540 - 50,160

= 2,380(F)

2) total expenses

= 42,007 - 41,131

= 876(U)

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