Question

In: Accounting

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two...

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 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 $ 2,970
Classroom supplies $ 290
Utilities $ 1,200 $ 75
Campus rent $ 4,800
Insurance $ 2,400
Administrative expenses $ 3,700 $ 40 $ 5

For example, administrative expenses should be $3,700 per month plus $40 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 62 students; however, it actually ran four courses with a total of only 52 students. The actual operating results for September appear below:

Actual
Revenue $ 51,660
Instructor wages $ 11,160
Classroom supplies $ 17,830
Utilities $ 1,910
Campus rent $ 4,800
Insurance $ 2,540
Administrative expenses $ 3,596

Required:

1. Prepare the company’s planning budget for September.

2. Prepare the company’s flexible budget for September.

3. Calculate the revenue and spending variances for September.

Solutions

Expert Solution

Planning Budget
Particulars Planning Budget
Courses 4
Student 62
Revenue $54,560.00
Expenses:
Instructor Wages $11,880.00
Classroom Supplies $17,980.00
Utilities $1,500.00
Campus Rent $4,800.00
Insurance $2,400.00
Administrative Expenses $4,170.00
Tototal Expense $42,730.00
Net Operating Income $11,830.00
Flexible Budget
Particulars Flexible Budget
Courses 4
Student 52
Revenue $45,760.00
Expenses:
Instructor Wages $11,880.00
Classroom Supplies $15,080.00
Utilities $1,500.00
Campus Rent $4,800.00
Insurance $2,400.00
Administrative Expenses $4,120.00
Tototal Expense $39,780.00
Net Operating Income $5,980.00
Particulars Actual Revenue and spending variances Flexible Budget
Courses 4 4
Student 52 52
Revenue $51,660.00 $5,900.00 F $45,760.00
Expenses:
Instructor Wages $11,160.00 $720.00 F $11,880.00
Classroom Supplies $17,830.00 $2,750.00 U $15,080.00
Utilities $1,910.00 $410.00 U $1,500.00
Campus Rent $4,800.00 $0.00 None $4,800.00
Insurance $2,540.00 $140.00 U $2,400.00
Administrative Expenses $3,596.00 $524.00 F $4,120.00
Tototal Expense $41,836.00 $2,056.00 U $39,780.00
Net Operating Income $9,824.00 $3,844.00 F $5,980.00

Related Solutions

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two...
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 $ 2,970...
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two...
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 64 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...
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two...
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 64 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...
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two...
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 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...
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two...
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 64 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 $ 2,910...
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two...
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...
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two...
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...
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two...
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...
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two...
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 64 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...
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two...
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 $ 2,940...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT