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 63 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Fixed Cost per Cost per Cost per Month Course Student Instructor wages Classroom supplies Utilities $ 2,940 $ 310 $ 1,230 $ 75 Campus rent $ 4,900 Insurance $ 2,100 Administrative expenses $ 3,700 $ 42 $ 5 For example, administrative expenses should be $3,700 per month plus $42 per course plus $5 per student. The company's sales should average $860 per student. The company planned to run four courses with a total of 63 students; however, it actually ran four courses with a total of only 53 students. The actual operating results for September were as follows: Revenue Actual $ 51,280 Instructor wages $ 11,040 Classroom supplies $ 19,380 Utilities Campus rent $ 1,940 $ 4,900 $ 2,240 $ 3,609 Insurance Administrative expenses 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 < Prev 5 of 5 Next >
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 63 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Fixed Cost per Cost per Cost per Month Course Student Instructor wages Classroom supplies Utilities $ 2,940 $ 310 $ 1,230 $ 75 Campus rent $ 4,900 Insurance $ 2,100 Administrative expenses $ 3,700 $ 42 $ 5 For example, administrative expenses should be $3,700 per month plus $42 per course plus $5 per student. The company's sales should average $860 per student. The company planned to run four courses with a total of 63 students; however, it actually ran four courses with a total of only 53 students. The actual operating results for September were as follows: Revenue Actual $ 51,280 Instructor wages $ 11,040 Classroom supplies $ 19,380 Utilities Campus rent $ 1,940 $ 4,900 $ 2,240 $ 3,609 Insurance Administrative expenses 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 < Prev 5 of 5 Next >
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 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 63 students enrolled in those two courses. Data concerning the company's cost formulas
appear below:
Fixed
Cost per Cost per Cost per
Month
Course
Student
Instructor wages
Classroom supplies
Utilities
$ 2,940
$ 310
$ 1,230
$ 75
Campus rent
$ 4,900
Insurance
$ 2,100
Administrative expenses
$ 3,700
$ 42
$ 5
For example, administrative expenses should be $3,700 per month plus $42 per course plus $5 per student. The company's sales
should average $860 per student.
The company planned to run four courses with a total of 63 students; however, it actually ran four courses with a total of only 53
students. The actual operating results for September were as follows:
Revenue
Actual
$ 51,280
Instructor wages
$ 11,040
Classroom
supplies
$ 19,380
Utilities
Campus rent
$ 1,940
$ 4,900
$ 2,240
$ 3,609
Insurance
Administrative expenses
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
< Prev
5 of 5
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