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 61 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 Cost per cost per Month Course Student $ 2,900 $ 1,220 $4,500 Revenue Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses $ 2,100 $ 3,700 $75 $ 42 For example, administrative expenses should be $3,700 per month plus $42 per course plus $4 per student. The company's sales should average $880 per student. $ 300 Actual $ 50,780 $ 10,000 $ 18,150 $ 1,930 $4,500 $ 2,240 $ 3,538 The company planned to run four courses with a total of 61 students, however, it actually ran four courses with a total of only 59 students. The actual operating results for September were as follows: 54 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.)
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 61 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 Cost per cost per Month Course Student $ 2,900 $ 1,220 $4,500 Revenue Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses $ 2,100 $ 3,700 $75 $ 42 For example, administrative expenses should be $3,700 per month plus $42 per course plus $4 per student. The company's sales should average $880 per student. $ 300 Actual $ 50,780 $ 10,000 $ 18,150 $ 1,930 $4,500 $ 2,240 $ 3,538 The company planned to run four courses with a total of 61 students, however, it actually ran four courses with a total of only 59 students. The actual operating results for September were as follows: 54 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.)
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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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 61 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
Revenue
Instructor wages
Classroom supplies
Utilities
Campus rent
Insurance
Administrative expenses
Courses
Students
Revenue
Expenses
Instructor wages
Classroom supplies
$42
For example, administrative expenses should be $3,700 per month plus $42 per course plus $4 per student. The company's sales
should average $880 per student.
Utilities
Campus rent
Insurance
Fixed
Cost per Cost per
Month
Administrative expenses
Total expense
Net operating income
$ 1,220
$4,500
$2,100
$ 3,700
The company planned to run four courses with a total of 61 students, however, it actually ran four courses with a total of only 59
students. The actual operating results for September were as follows:
$
$
Actual
$ 50,780
$ 10,880
$ 18,150
$1,930
$4,500
$2,240
$ 3,538
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.)
Actual Results
Course
$ 2,900
$75
4
59
50,780
cost per
Student
10,880
18.150
$ 300
1,930
4,500
2,240
3,538
41,238
9,542
Gourmand Cooking School
Flexible Budget Performance Report
For the Month Ended September 30
$4
Flexible
Budget
Planning
Budget
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