Managerial Accounting: E9-18 The Gourmand Cooking School runs short cooking courses

Managerial Accounting 
Exercise 9-18 Working with More Than One Cost Driver 
The Gourmand Cooking School runs short cooking courses as 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 2,960 
Classroom supplies 300 
Utilities 1,230 70 
Campus rent 4,900 
Insurance 2,300 
Administrative expenses 3,600 41 5 

For example, administrative expenses should be $3,600 per month plus $41 per course plus $5 per student. The company’s sales should average $850 per student. 
   
The actual operating results for September appear below: 
Actual 
Revenue 51,500 
Instructor wages 11,120 
Classroom supplies 19,050 
Utilities 1,920 
Campus rent 4,900 
Insurance 2,440 
Administrative expenses 3,510 

Required: 
1. The Gourmand Cooking School expects to run four courses with a total of 64 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 54 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. (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.)
Powered by