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 64 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Instructor wages Classroon supplies Utilities Campus rent Insurance Administrative expenses Fixed Cost per Month Revenue Instructor wages Classroom supplies Utilities $ 1,230 $4,800 $ 2,300 $3,000 Campus rent Insurance Administrative expenses $ 45 For example, administrative expenses should be $3,800 per month plus $45 per course plus $5 per student. The company's sales should average $890 per student. The company planned to run four courses with a total of 64 students; however, it actually ran four courses with a total of only 58 students. The actual operating results for September appear below: Cost per Course $ 2,970 $ 60 Actual $ 54,060 Cost per Student $300 $ 11,160 $ 19,050 $1,800 $ 4,000 $ 2,440 $ 3,726 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.
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.
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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 64 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
$ 1,230
$ 4,800
$ 2,300
$ 3,800
Revenue
Instructor wages
Classroom supplies
Utilities
Campus rent
Insurance
Administrative expenses
Cost per
Course
$ 2,970
$60
$ 45
For example, administrative expenses should be $3,800 per month plus $45 per course plus $5 per student. The company's sales
should average $890 per student.
Cost per
Student
$ 300
Actual
$ 54,060
$ 11,160
$ 19,050
$ 1,880
$ 4,800
$ 2,440
$ 3,726
$5
The company planned to run four courses with a total of 64 students; however, it actually ran four courses with a total of only 58
students. The actual operating results for September appear below:
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F934f47dc-fbed-471a-afb0-57b8b00080e8%2Fa4f73ef9-1ace-449d-8086-92a429106a98%2F5i6aew5_processed.png&w=3840&q=75)
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