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 Fixed Cost per Month Utilities $1,220 $ 5,000 $ 2,200 Campus rent Instructor wages Classroom supplies Insurance $3,800 $6 For example, administrative expenses should be $3,800 per month plus $46 per course plus $6 per student. The company's sales should average $880 per student. Cost per Course $ 2,900 The company planned to run four courses with a total of 61 students; however, it actually ran four courses with a total of only 53 students. The actual operating results for September appear below: Administrative expenses $65 $46 Cost per Student Actual $ 50,780 $10,880 $ 18,150 $ 1,890 $ 5,000 $ 2,340 $3,776 $ 300
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 Fixed Cost per Month Utilities $1,220 $ 5,000 $ 2,200 Campus rent Instructor wages Classroom supplies Insurance $3,800 $6 For example, administrative expenses should be $3,800 per month plus $46 per course plus $6 per student. The company's sales should average $880 per student. Cost per Course $ 2,900 The company planned to run four courses with a total of 61 students; however, it actually ran four courses with a total of only 53 students. The actual operating results for September appear below: Administrative expenses $65 $46 Cost per Student Actual $ 50,780 $10,880 $ 18,150 $ 1,890 $ 5,000 $ 2,340 $3,776 $ 300
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.
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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 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
Fixed Cost per
Month
Utilities
$1,220
$ 5,000
$ 2,200
$ 3,800
Instructor wages
Classroom supplies
Campus rent
Insurance
$46
$6
For example, administrative expenses should be $3,800 per month plus $46 per course plus $6 per student. The
company's sales should average $880 per student.
The company planned to run four courses with a total of 61 students; however, it actually ran four courses with a total of
only 53 students. The actual operating results for September appear below:
Cost per
Course
$ 2,900
Administrative expenses
$ 65
Cost per
Student
Actual
$ 50,780
$ 10,880
$ 18,150
$ 1,890
$ 5,000
$ 2,340
$ 3,776
$ 300
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.
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