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 62 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			$	2,910
Classroom supplies					$	290
Utilities	$	1,200	$	55
Campus rent	$	4,700
Insurance	$	2,000
Administrative expenses	$	4,000	$	43	$	4

For example, administrative expenses should be $4,000 per month plus $43 per course plus $4 per student. The companys sales should average $900 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 54 students. The actual operating results for September appear below:

	Actual
Revenue	$	52,900
Instructor wages	$	10,920
Classroom supplies	$	17,830
Utilities	$	1,830
Campus rent	$	4,700
Insurance	$	2,140
Administrative expenses	$	3,846

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.