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: Instructor vages Classroom supplies Utilities Campus rent Insurance Administrative expenses Fixed Cost per Cost per Month $1,240 $5,100 Revenue Instructor vages Classroom supplies Utilities Campus rent Insurance Administrative expenses $2,000 $3,800 Course $2,950 For example, administrative expenses should be $3,800 per month plus $43 per course plus $6 per student. The company's sales should average $870 per student. Actual $51,910 $11,080 $18,750 $ 60 The company planned to run four courses with a total of 63 students; however, it actually ran four courses with a total of only 55 students. The actual operating results for September were as follows: $ 1,890 $ 5,100 $ 2,140 $ 3,776 Cost per Student $300 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 63 students enrolled in those two courses. Data concerning the company's cost formulas appear below: Instructor vages Classroom supplies Utilities Campus rent Insurance Administrative expenses Fixed Cost per Cost per Month $1,240 $5,100 Revenue Instructor vages Classroom supplies Utilities Campus rent Insurance Administrative expenses $2,000 $3,800 Course $2,950 For example, administrative expenses should be $3,800 per month plus $43 per course plus $6 per student. The company's sales should average $870 per student. Actual $51,910 $11,080 $18,750 $ 60 The company planned to run four courses with a total of 63 students; however, it actually ran four courses with a total of only 55 students. The actual operating results for September were as follows: $ 1,890 $ 5,100 $ 2,140 $ 3,776 Cost per Student $300 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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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 63 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
Month
Revenue
Instructor vages
Classroom supplies
Utilities
Campus rent
Insurance
Administrative expenses
$1,240 $ 60
$5,100
Course
$2,950
$2,000
$3,800 $ 43
For example, administrative expenses should be $3,800 per month plus $43 per course plus $6 per student. The company's sales
should average $870 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 55
students. The actual operating results for September were as follows:
Actual
$51,910
$11,080
$18,750
$1,890
Cost per
Student
$300
$ 5,100
$ 2,140
$ 3,776
$
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.)
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