Exercise 9-12 Working with More Than One Cost Driver [LO9-1, LO9-2, LO9-3]

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 64 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			$	2,970
Classroom supplies					$	260
Utilities	$	1,220	$	65
Campus rent	$	4,700
Insurance	$	2,300
Administrative expenses	$	3,700	$	46	$	5

For example, administrative expenses should be $3,700 per month plus $46 per course plus $5 per student. The companys sales should average $900 per student.

The company planned to run four courses with a total of 64 students; however, it actually ran four courses with a total of only 54 students. The actual operating results for September appear below:

	Actual
Revenue	$	54,700
Instructor wages	$	11,160
Classroom supplies	$	16,490
Utilities	$	1,890
Campus rent	$	4,700
Insurance	$	2,440
Administrative expenses	$	3,630

Required:

1. Prepare the companys planning budget for September.

2. Prepare the companys flexible budget for September.

3. Calculate the revenue and spending variances for September.

Required 1 Required 2 Required 3 Prepare the company's planning budget for September. Gourmand Cooking School Planning Budget For the Month Ended September 30 Revenue Expenses Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Total expense Net operating income Required 1 Required 2> Required 1Required 2 Required 3 Prepare the company's flexible budget for September. Gourmand Cooking School Flexible Budget For the Month Ended September 30 Actual courses 45 Actual students Revenue Expenses Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Total expense Net operating income K Required 1 Required 3 > Calculate the revenue and spending 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.) Gourmand Cooking S Revenue and Spending Variances For the Month Ended September 30 Actual Revenue and Spending Flexible Variances Results Budget ourses 4 tudents 54 evenue S 54,700 xpenses Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses 11,160 16,490 1,890 4,700 2,440 3,630 40,310 S 14,390 otal expense et operating income Required 2 Required3 >