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 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		$ 2,910
Classroom supplies			$ 300
Utilities	$ 1,240	$ 85
Campus rent	$ 5,000
Insurance	$ 2,000
Administrative expenses	$ 3,900	$ 41	$ 6

For example, administrative expenses should be $3,900 per month plus $41 per course plus $6 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 60 students. The actual operating results for September were as follows:

Actual
Revenue	$ 54,700
Instructor wages	$ 10,920
Classroom supplies	$ 19,050
Utilities	$ 1,990
Campus rent	$ 5,000
Insurance	$ 2,140
Administrative expenses	$ 3,874

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.)

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
	Actual Results			Flexible Budget			Planning Budget
Courses	4
Students	60
Revenue	$54,700
Expenses:
Instructor wages	10,920
Classroom supplies	19,050
Utilities	1,990
Campus rent	5,000
Insurance	2,140
Administrative expenses	3,874
Total expense	42,974
Net operating income	$11,726