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Exercise 9-18 Working with More Than One Cost Driver [LO9-2, LO9-3, LO9-4, LO9-5] The Gourmand Cooking School runs short cooking courses at its small campus.
Exercise 9-18 Working with More Than One Cost Driver [LO9-2, LO9-3, LO9-4, LO9-5] 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 Cost per Cost per Month Course Student $2,950 Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses $280 $1,250 55 $5,000 $2,100 $3,600 42 3 For example, administrative expenses should be $3,600 per month plus $42 per course plus $3 per student. The company's sales should average $860 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 60 students. The actual operating results for September appear below: Revenue Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Actual $52,140 $ 11,080 $17,770 $ 1,880 $ 5,000 $ 2,240 $ 3,386 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.) Gourmand Cooking School Flexible Budget Performance Report For the Month Ended September 30 Revenue and Actual Results Flexible Spending Variances Budget Planning Budget Activity Variances Courses 4 4 4 Students 60 60 64 Revenue $ 52,140 540F $51,600 Expenses o None Instructor wages Classroom supplie:s Utilities Campus rent Insurance Administrative expenses 11,080 17,770 1,880 5,000 2,240 3,386 41,356 10,784 o None o None o None o None Total expense Net operating income
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