The Gourmand Cooking School 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 two courses in a month and have a total of 62 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 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 two courses in a month and have a total of 62 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

  

	Fixed Cost per Month		Cost per Course		Cost per Student
Instructor wages			$	2,940
Classroom supplies					$	260
Utilities	$	1,210	$	80
Campus rent	$	4,800
Insurance	$	2,300
Administrative expenses	$	4,000	$	43	$	5

 

For example, administrative expenses should be $4,000 per month plus $43 per course plus $5 per student. The company’s sales should average $890 per student.

 

The actual operating results for September appear below:

 

		Actual
Revenue	$	52,280
Instructor wages	$	11,040
Classroom supplies	$	15,970
Utilities	$	1,940
Campus rent	$	4,800
Insurance	$	2,440
Administrative expenses	$	3,908

 

Required:

1.

The Gourmand Cooking School expects to run four courses with a total of 62 students in September. Complete the company’s planning budget for this level of activity. 2. The school actually ran four courses with a total of 60 students in September. Complete the company’s flexible budget for this level of activity. 3. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for September. Explanation: 1. Revenue ($890 × 62) = $55,180 Instructor wages ($2,940 × 4) = $11,760 Classroom supplies ($260 × 62) = $16,120 Utilities ($1,210 + ($80 × 4)) = $1,530 Administrative expenses ($4,000 + ($43 × 4) + ($5 × 62)) = $4,482   2. Revenue ($890 × 60) = $53,400 Instructor wages ($2,940 × 4) = $11,760 Classroom supplies ($260 × 60) = $15,600 Utilities ($1,210 + ($80 × 4)) = $1,530 Administrative expenses ($4,000 + ($43 × 4) + ($5 × 60)) = $4,472      3. Gourmand Cooking School Flexible Budget Performance Report For the Month Ended September 30   Actual Results Revenue and Spending Variances Flexible Budget Activity Variances Planning Budget   Courses (q1)   4            4           4     Students (q2)   60            60            62     Revenue($890q2) $ 52,280   $ 1,120   U $ 53,400   $ 1,780   U $ 55,180           Expenses:                                Instructor wages ($2,940q1)   11,040     720   F   11,760     0   None   11,760     Classroom supplies ($260q2)   15,970     370   U   15,600     520   F   16,120     Utilities ($1,210 + $80q1)   1,940     410   U   1,530     0   None   1,530     Campus rent ($4,800)   4,800     0   None   4,800     0   None   4,800     Insurance ($2,300)   2,440     140   U   2,300     0   None   2,300     Administrative expenses    ($4,000 + $43q1 +$5q2)   3,908     564   F   4,472     10   F   4,482           Total expense   40,098     364   F   40,462     530   F   40,992           Net operating income $ 12,182   $ 756   U $ 12,938   $ 1,250   U $ 14,188