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: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Fixed Cost per Month $ 1,210 $ 4,800 Revenue Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses $ 2,100 $ 3,600 Cost per Course $ 2,910 $ 60 Cost per Student $ 280 $ 45 For example, administrative expenses should be $3,600 per month plus $45 per course plus $6 per student. The company's sales should average $890 per student. Actual $ 54,950 $ 10,920 $ 18,050 $ 1,860 $ 4,800 $ 2,240 $ 3,596 The company planned to run four courses with a total of 65 students; however, it actually ran four courses with a total of only 57 students. The actual operating results for September appear below: $6 Required: 1. Prepare the company's planning budget for September. 2. Prepare the company's flexible budget for September. 3. Calculate the revenue and spending variances for September.
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: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Fixed Cost per Month $ 1,210 $ 4,800 Revenue Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses $ 2,100 $ 3,600 Cost per Course $ 2,910 $ 60 Cost per Student $ 280 $ 45 For example, administrative expenses should be $3,600 per month plus $45 per course plus $6 per student. The company's sales should average $890 per student. Actual $ 54,950 $ 10,920 $ 18,050 $ 1,860 $ 4,800 $ 2,240 $ 3,596 The company planned to run four courses with a total of 65 students; however, it actually ran four courses with a total of only 57 students. The actual operating results for September appear below: $6 Required: 1. Prepare the company's planning budget for September. 2. Prepare the company's flexible budget for September. 3. Calculate the revenue and spending variances for September.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
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A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text: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:
Instructor wages
Classroom supplies
Utilities
Campus rent
Insurance
Administrative expenses
Fixed Cost
per Month
$ 1,210
$ 4,800
$ 2,100
$ 3,600
Revenue
Instructor wages
Classroom supplies
Utilities
Campus rent
Insurance
Administrative expenses
Cost per
Course
$ 2,910
$ 60
$ 45
Actual
$ 54,950
$ 10,920
$ 18,050
$ 1,860
$ 4,800
$2,240
$ 3,596
Cost per
Student
$ 280
For example, administrative expenses should be $3,600 per month plus $45 per course plus $6 per student. The company's sales
should average $890 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 57
students. The actual operating results for September appear below:
$ 6
Required:
1. Prepare the company's planning budget for September.
2. Prepare the company's flexible budget for September.
3. Calculate the revenue and spending variances for September.
Transcribed Image Text:Complete this question by entering your answers
Required 1 Required 2 Required 3
Prepare the company's planning budget for September.
Gourmand Cooking School
Planning Budget
For the Month Ended September 30
Actual courses
Actual students
Revenue
Expenses:
Instructor wages
Classroom supplies
Utilities
Campus rent
Insurance
Administrative expenses
Total expense
Net operating income
0
0
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Transcribed Image Text:Required 1 Required 2 Required 3
Calculate the revenue and spending variances for September. (Indicate the effect of each variance
favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as p
Courses
Students
Revenue
Expenses:
Instructor wages
Classroom supplies
Utilities
Campus rent
Insurance
Gourmand Cooking School
Revenue and Spending Variances
For the Month Ended September 30
Administrative expenses
Total expense
Net operating income
Actual
Results
$
$
4
57
54,950
10,920
18,050
1,860
4,800
2,240
3,596
41,466
13,484
Revenue and Spending
Variances
Flexible
Budget
Solution
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