l ne ou rmana cooKing SCn001 runs snort COOKing Courses at its small Campus. Man
ID: 2514073 • Letter: L
Question
l ne ou rmana cooKing SCn001 runs snort COOKing Courses at its small Campus. Management nas laentIT1ea two cost arvers 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 61 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Fixed Cost per Cost per Cost per Month Course Student $2,910 Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses $290 $1,220 60 $4,700 $2,100 $3,900 44 $4 For example, administrative expenses should be $3,900 per month plus $44 per course plus $4 per student. The company's sales should average $870 per student. The company planned to run four courses with a total of 61 students; however, it actually ran four courses with a total of only 55 students. The actual operating results for September appear below: Revenue Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Actual 50,170 10,920 17,540 $ 1,870 $ 4,700 $ 2,240 3,746 Required Prepare a 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.)Explanation / Answer
Actual Revenue and spending variances Flexible budget Activity variances Planning budget Courses 4 4 4 Students 55 55 61 Revenue 50170 2320 F 47850 5220 U 53070 Expenses: Instructor wages 10920 720 F 11640 0 None 11640 Classroom supplies 17540 1590 U 15950 1740 F 17690 Utilities 1870 410 U 1460 0 F 1460 Campus rent 4700 0 None 4700 0 None 4700 Insurance 2240 140 U 2100 0 None 2100 Administrative expenses 3746 550 F 4296 24 F 4320 Total Expenses 41016 870 U 40146 1764 F 41910 Net operating income 9154 1450 F 7704 3456 U 11160
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