The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost driv 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 50 students enrolled in those two courses. Data concerning the company's cost formulas appear below:
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost driv 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 50 students enrolled in those two courses. Data concerning the company's cost formulas appear below:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 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 50 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
Utilities
Campus rent
Insurance
Administrative expenses
Month
Course
$ 3,080
Student
$ 260
$ 870
$ 4,200
$ 1,890
$ 3,270
$ 130
$ 15
$ 4
For example, administrative expenses should be $3,270 per month plus $15 per course plus $4 per student. The company's sales
should average $800 per student.
The company planned to run three courses with a total of 45 students; however, it actually ran three courses with a total of only 42
students. The actual operating results for September were as follows:
Actual
$ 32,400
$ 9,080
Revenue
Instructor wages
Classroom supplies
Utilities
Campus rent
Insurance
Administrative expenses
Required:
$ 8,540
$ 1,530
$ 4,200
$ 1,890
$ 3,790
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.
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