Mary is a principal of a school that provides education and accommodation for students. The school secretary prepared the following summary of costs for 2018, including a column showing the original budget for 2018.

The School - cost analysis

2018 budget

2018 actual

Number of students

200

180

Fixed costs

Utilities

$ 60,000

$ 64,000

Janitorial services

40,000

38,000

Repairs and maintenance

32,000

28,000

Salaries for non-convent employees

180,000

190,000

Total fixed costs

312,000

320,000

Variable costs

Food

1000,000

920,000

Clothing

90,000

82,000

Laundry & Linen Service

30,000

25,000

Educational costs

60,000

52,000

Allowances

50,000

48,000

Total variable costs

1,230,000

1,127,000

Total Costs

1,542,000

1,447,000

Mary is pleased that total costs were below budget for the year, but she wonders if this is partly due to the fact that the school enrolled fewer children than expected for the year.

Required:

(1)Prepare a flexible budget for 2018, based on the number of children actually enrolled in 2018.

(2)Should Mary be satisfied with the school's cost management in 2018? Explain.