Question

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 60 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			$	2,920
Classroom supplies					$	300
Utilities	$	1,220	$	90
Campus rent	$	5,000
Insurance	$	2,200
Administrative expenses	$	3,800	$	42	$	5

For example, administrative expenses should be $3,800 per month plus $42 per course plus $5 per student. The company’s sales should average $880 per student.

The company planned to run four courses with a total of 60 students; however, it actually ran four courses with a total of only 56 students. The actual operating results for September appear below:

	Actual
Revenue	$	49,900
Instructor wages	$	10,960
Classroom supplies	$	17,850
Utilities	$	1,990
Campus rent	$	5,000
Insurance	$	2,340
Administrative expenses	$	3,694

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.)

Answer 1