Required: Prepare a flexible budget performance report for September. Note: 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.
Required: Prepare a flexible budget performance report for September. Note: 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
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.
Sales Budget and Selling
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.
Question
Transcribed Image Text:The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses for
budgeting purposes-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 60 students enrolled in those two courses. Data concerning the company's cost formulas appear below:
Fixed
Cost per Cost per Cost per
Instructor wages
Classroom supplies
Month
Course
$ 2,930
Student
$ 270
$ 75
Utilities
$ 1,220
Campus rent
$ 4,900
Insurance
$ 2,400
Administrative expenses
$ 3,600
$ 44
$5
For example, administrative expenses should be $3,600 per month plus $44 per course plus $5 per student. The company's sales
should average $870 per student.
The company planned to run four courses with a total of 60 students; however, it actually ran four courses with a total of only 54
students. The actual operating results for September were as follows:
Revenue
Instructor wages
Classroom supplies
Utilities
Campus rent
$
Actual
49,300
$ 11,000
$ 16,050
$ 1,930
$
4,900
Insurance
$ 2,540
Administrative expenses
$ 3,502
Required:
Prepare a flexible budget performance report for September.
Note: 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.
Gourmand Cooking School
Flexible Budget Performance Report
For the Month Ended September 30
Courses
Students
Revenue
Expenses:
Instructor wages
Classroom supplies
Utilities
Campus rent
Insurance
Administrative expenses
Total expenses
Net operating income
Revenue and
Actual Results
Spending Variances
Flexible
Budget
Activity Variances
Planning
Budget
4
54
$
49,300
11,000
16,050
1,930
4,900
2,540
3,502
39,922
$
9,378
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