Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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:


Fixed Cost per MonthCost per CourseCost per Student
Instructor wages
$ 2,970
Classroom supplies

$ 270
Utilities$ 1,250$ 65
Campus rent$ 5,000

Insurance$ 2,200

Administrative expenses$ 4,000$ 41$ 4

For example, administrative expenses should be $4,000 per month plus $41 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 62 students. The actual operating results for September were as follows:


Actual
Revenue$ 52,140
Instructor wages$ 11,160
Classroom supplies$ 17,130
Utilities$ 1,920
Campus rent$ 5,000
Insurance$ 2,340
Administrative expenses$ 3,846

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.)

Step by Step Solution

3.32 Rating (152 Votes )

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

13th Edition

978-0073379616, 73379611, 978-0697789938

More Books

Students also viewed these Accounting questions

Question

Exude confidence, not arrogance.

Answered: 1 week ago