1.

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 reportsthe 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 companys cost formulas appear below:

Fixed Cost per Month Cost per Course Cost per Student Instructor wages $ 2,940 Classroom supplies $ 300 Utilities $ 1,230 $ 75 Campus rent $ 5,000 Insurance $ 2,200 Administrative expenses $ 3,900 $ 42 $ 3

For example, administrative expenses should be $3,900 per month plus $42 per course plus $3 per student. The companys 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 were as follows:

Actual Revenue $ 53,170 Instructor wages $ 11,040 Classroom supplies $ 18,750 Utilities $ 1,940 Campus rent $ 5,000 Insurance $ 2,340 Administrative expenses $ 3,683 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.)

2.

Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production Department are based on the following formulas, where q is the number of labor-hours worked in a month:

Cost Formulas Direct labor $16.40q Indirect labor $4,800 + $1.80q Utilities $5,300 + $0.40q Supplies $1,500 + $0.20q Equipment depreciation $18,400 + $2.50q Factory rent $8,600 Property taxes $2,500 Factory administration $13,000 + $0.70q

The Production Department planned to work 4,300 labor-hours in March; however, it actually worked 4,100 labor-hours during the month. Its actual costs incurred in March are listed below:

Actual Cost Incurred in March Direct labor $ 68,840 Indirect labor $ 11,720 Utilities $ 7,410 Supplies $ 2,570 Equipment depreciation $ 28,650 Factory rent $ 9,000 Property taxes $ 2,500 Factory administration $ 15,240

Required:

1. Prepare the Production Departments planning budget for the month.

2. Prepare the Production Departments flexible budget for the month.

3. Prepare the Production Departments flexible budget performance report for March, including both the spending and activity variances.

Gourmand Cooking School Flexible Budget Performance Report For the Month Ended September 30 Actual Results Flexible Budget Planning Budget Courses 4 Students 53 Revenue $ 53,170 Expenses: Instructor wages Classroom supplies Utilities 11,040 18,750 1,940 5,000 2,340 Campus rent Insurance Administrative expenses 3,683 Total expense 42,753 10,417 Net operating income $ Gourmand Cooking School Flexible Budget Performance Report For the Month Ended September 30 Actual Results Flexible Budget Planning Budget Courses 4 Students 53 Activity Variances Revenue $ 53,170 Revenue and Spending Variances Expenses: Instructor wages Classroom supplies Utilities Campus rent 11,040 18,750 1,940 5,000 2,340 3,683 42,753 10,417 Insurance Administrative expenses Total expense Net operating income $ Required 1 Required 2 Required 3 Prepare the Production Department's planning budget for the month. Packaging Solutions Corporation Production Department Planning Budget For the Month Ended March 31 Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense $ 0 Packaging Solutions Corporation Production Department Planning Budget For the Month Ended March 31 Actual labor-hours Budgeted labor-hours Juppnes Equipment depreciation Factory rent Property taxes Factory administration Total expense $ 0 Required 1 Required 2 Required 3 Prepare the Production Department's flexible budget for the month. Packaging Solutions Corporation Production Department Flexible Budget For the Month Ended March 31 Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense $ 0 Required 1 Required 2 Required 3 Prepare the Production Department's flexible budget for the month. Packaging Solutions Corporation Production Department Flexible Budget For the Month Ended March 31 Actual labor-hours Budgeted labor-hours Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense $ 0 Required 1 Required 2 Required 3 Prepare the Production Department's flexible budget performance report for March, including both the spending and activity variances. (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.) Packaging Solutions Corporation Production Department Flexible Budget Performance Report For the Month Ended March 31 Actual Flexible Results Budget 4,100 Planning Budget Labor-hours Direct labor $ Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration 68,840 11,720 7,410 2,570 28,650 9,000 2,500 15,240 Total expense $ 145,930 Required 1 Required 2 Required 3 Prepare the Production Department's flexible budget performance report for March, including both the spending and activity variances. (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.) Packaging Solutions Corporation Production Department Flexible Budget Performance Report For the Month Ended March 31 Actual Flexible Results Budget 4,100 Planning Budget Labor-hours Direct labor $ 68,840 Activity Variances Indirect labor Spending Variances Utilities 11,720 7,410 2,570 28,650 Supplies Equipment depreciation Factory rent Property taxes Factory administration 9,000 2,500 15,240 Total expense $ 145,930 Required 1 Required 2 Required 3 Prepare the Production Department's flexible budget performance report for March, including both the spending and activity variances. (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.) Packaging Solutions Corporation Production Department Flexible Budget Performance Report For the Month Ended March 31 Actual Flexible Results Budget 4,100 Planning Budget Labor-hours Direct labor $ 68,840 Indirect labor Utilities F None Supplies Equipment depreciation Factory rent Property taxes Factory administration 11,720 7,410 2,570 28,650 9,000 2,500 15,240 $ 145,930 U Total expense