Exercise 9-18 Working with More Than One Cost Driver [LO9-4, LO9-5] The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that 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 $ 2,970 Classroom supplies $ 270 Utilities $ 1,210 $ 75 Campus rent $ 4,900 Insurance $ 2,100 Administrative expenses $ 3,700 $ 42 $ 5 For example, administrative expenses should be $3,700 per month plus $42 per course plus $5 per student. The companys sales should average $900 per student. The actual operating results for September appear below: Actual Revenue $ 53,800 Instructor wages $ 11,160 Classroom supplies $ 16,860 Utilities $ 1,920 Campus rent $ 4,900 Insurance $ 2,240 Administrative expenses $ 3,609 Required: 1. The Gourmand Cooking School expects to run four courses with a total of 63 students in September. Complete the companys planning budget for this level of activity. 2. The school actually ran four courses with a total of 55 students in September. Complete the companys 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.)

Next probkem:

Problem 9-19 Activity and Spending Variances [LO9-1, LO9-2, LO9-3]

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the companys costing system and do what you can to help us get better control of our manufacturing overhead costs. You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.

After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March:

	Cost Formula	Actual Cost in March
Utilities	$16,300 plus $0.17 per machine-hour	$	20,650
Maintenance	$38,300 plus $1.50 per machine-hour	$	54,600
Supplies	$0.40 per machine-hour	$	5,800
Indirect labor	$94,000 plus $1.80 per machine-hour	$	121,900
Depreciation	$67,600	$	69,300

During March, the company worked 13,000 machine-hours and produced 7,000 units. The company had originally planned to work 15,000 machine-hours during March.

Required:

1.	Complete the report showing the activity variances for March. (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.	Complete the report showing the spending variances for March. (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.)

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