Exercise 9-6 (Algo) Working with More Than One Cost Driver (LO9-2, LO9-3, LO9-5, LO9-6] 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: Instructor vages Classroom supplies Utilities Campus rent Insurance Administrative expenses Fixed Cost per Coat per Coat per Month Course Student $ 2,930 $ 280 $1,240 $ 55 $5,200 $2,300 $3,500 $ 42 $4 For example, administrative expenses should be $3,500 per month plus $42 per course plus $4 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 54 students. The actual operating results for September were as follows: Ravenue Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Actual $ 52,140 $ 11,000 $17.770 $ 1,870 $ 5,200 $ 2,440 $ 3,350 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 "P" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Input all amounts as positive values Gourmand Cooking School Flexible Budget Performance Report For the Month Ended September 30 Actual Results Flexible Budget Planning Budget 4 Courses Students 54 $ 52,140 Revenue Expenses: Instructor wages Classroom supplies Utilities Campus ront Insurance Administrative expenses Total expense Not operating income 11,000 17.770 1,870 5,200 2,440 3,350 41.630 10,510 $ Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the company's costs: Fixed Coat per Month Coat per Car Washed $0.50 50.10 $0.15 $0.40 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $1,200 $4,800 $8,300 $1,900 $1,800 $0.03 For example, electricity costs should be $1,200 per month plus $0.10 per car washed. The company expects to wash 8,000 cars in August and to collect an average of $6.90 per car washed. The actual operating results for August are as follows: Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,100 $57,200 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income 4,500 1,970 1,440 8,360 8,300 2,100 1,940 28,610 $ 28,690 Required: Prepare a flexible budget performance report that shows the company's revenue and spending variances and activity variances for August. (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.) Lavage Rapide Flexible Budget Performance Report For the Month Ended August 31 Actual Flexible Results Budget Planning Budget Cars washed 8,100 $ 57,300 4,500 1,970 1,440 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Not operating income 8,360 + 8,300 2,100 1,940 28,610 28,690 $
