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 63 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			$	2,950
Classroom supplies					$	300
Utilities	$	1,210	$	80
Campus rent	$	5,100
Insurance	$	2,200
Administrative expenses	$	3,800	$	45	$	5

For example, administrative expenses should be $3,800 per month plus $45 per course plus $5 per student. The company’s sales should average $890 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 53 students. The actual operating results for September appear below:

	Actual
Revenue	$	53,170
Instructor wages	$	11,080
Classroom supplies	$	18,750
Utilities	$	1,940
Campus rent	$	5,100
Insurance	$	2,340
Administrative expenses	$	3,721

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