The Toque Cooking Academy runs short cooking courses at its small

The Toque Cooking Academy runs short cooking courses at its small campus. Management has identified two cost drivers that it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run four courses in a month and have a total of 61 students enrolled in those four courses. Data concerning the company’s cost formulas appear below:

	Fixed Cost per Month		Cost per Course	Cost per Student
Instructor wages			$2,920
Classroom supplies				$290
Utilities	$	1,230	$55
Campus rent	$	4,700
Insurance	$	2,400
Administrative expenses	$	3,700	$44	$4

For example, administrative expenses should be $3,700 per month plus $44 per course plus $4 per student. The company’s sales should average $880 per student.

The actual operating results for October appear below:

	Actual
Revenue	$	50,780
Instructor wages	$	10,960
Classroom supplies	$	17,540
Utilities	$	1,860
Campus rent	$	4,700
Insurance	$	2,540
Administrative expenses	$	3,546

Required:
1.	The Toque Cooking Academy expects to run four courses with a total of 61 students in October. Complete the company’s planning budget for this level of activity. (Input all amounts as positive values. Omit the "$" sign in your response.)

Toque Cooking Academy Planning Budget For the Month Ended October 31
Revenue	$
Expenses:
Instructor wages
Classroom supplies
Utilities
Campus rent
Insurance
Administrative expenses
Total expense
Net operating income	$

2.	The school actually ran four courses with a total of 59 students in October. Complete the company’s flexible budget for this level of activity. (Input all amounts as positive values. Omit the "$" sign in your response.)

Toque Cooking Academy Flexible Budget For the Month Ended October 31
Revenue	$
Expenses:
Instructor wages
Classroom supplies
Utilities
Campus rent
Insurance
Administrative expenses
Total expense
Net operating income	$

3.

Complete the flexible budget performance report that shows both activity variances and revenue and spending variances for October. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Toque Cooking Academy Flexible Budget Performance Report For the Month Ended October 31
	Activity Variances		Revenue and Spending Variances
Revenue	$	U	$	U
Expenses:
Instructor wages		None		F
Classroom supplies		F		U
Utilities		None		U
Campus rent		None		None
Insurance		None		U
Administrative expenses		F		F
Total expense		F		F
Net operating income	$	U	$	U

Explanation:

1.

Revenue ($880 × 61) = $53,680

Instructor wages ($2,920 × 4) = $11,680

Classroom supplies ($290 × 61) = $17,690

Utilities ($1,230 + ($55 × 4)) = $1,450

Administrative expenses ($3,700 + ($44 × 4) + ($4 × 61)) = $4,120

2.

Revenue ($880 × 59) = $51,920

Instructor wages ($2,920 × 4) = $11,680

Classroom supplies ($290 × 59) = $17,110

Utilities ($1,230 + ($55 × 4)) = $1,450

Administrative expenses ($3,700 + ($44 × 4) + ($4 × 59)) = $4,112

3.

   

Toque Cooking Academy Flexible Budget Performance Report For the Month Ended October 31
	Planning Budget		Activity Variances			Flexible Budget		Revenue and Spending Variances			Actual Results
Courses (q1)		4					4					4
Students (q2)		61					59					59
Revenue($880q2)	$	53,680	$	1,760	U	$	51,920	$	1,140	U	$	50,780
Expenses:
Instructor wages ($2,920q1)		11,680		0	None		11,680		720	F		10,960
Classroom supplies ($290q2)		17,690		580	F		17,110		430	U		17,540
Utilities ($1,230 + $55q1)		1,450		0	None		1,450		410	U		1,860
Campus rent ($4,700)		4,700		0	None		4,700		0	None		4,700
Insurance ($2,400)		2,400		0	None		2,400		140	U		2,540
Administrative expenses    ($3,700 + $44q1 +$4q2)		4,120		8	F		4,112		566	F		3,546
Total expense		42,040		588	F		41,452		306	F		41,146
Net operating income	$	11,640	$	1,172	U	$	10,468	$	834	U	$	9,634