Question
Mary is a principal of a school which provides education and accommodation for students. The school secretary prepared the following summary of costs for 2020,
Mary is a principal of a school which provides education and accommodation for students. The school secretary prepared the following summary of costs for 2020, including a column showing the original budget for 2020.
The School - cost analysis
2020 budget
2020 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:
(1MAKE A flexible budget for 2018, based on the number of children actually enrolled in 2020.
(2)Should Mary be satisfied with the school's cost management in 2020? Explain.
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Financial Reporting and Analysis Using Financial Accounting Information
Authors: Charles H. Gibson
13th edition
1285401603, 1133188796, 9781285401607, 978-1133188797
