Question
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that it uses in its budgeting and
| The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that 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 50 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 | $ | 3,080 | ||||
| Classroom supplies | $ | 260 | ||||
| Utilities | $ | 870 | $ | 130 | ||
| Campus rent | $ | 4,200 | ||||
| Insurance | $ | 1,890 | ||||
| Administrative expenses | $ | 3,270 | $ | 15 | $ | 4 |
| For example, administrative expenses should be $3,270 per month plus $15 per course plus $4 per student. The companys sales should average $800 per student. |
| The actual operating results for September appear below: |
| Actual | ||
| Revenue | $ | 32,400 |
| Instructor wages | $ | 9,080 |
| Classroom supplies | $ | 8,540 |
| Utilities | $ | 1,530 |
| Campus rent | $ | 4,200 |
| Insurance | $ | 1,890 |
| Administrative expenses | $ | 3,790 |
| Required: | |
| 1. | The Gourmand Cooking School expects to run three courses with a total of 45 students in September. Complete the companys planning budget for this level of activity. |
| 2. | The school actually ran three courses with a total of 42 students in September. Complete the companys flexible budget for this level of activity. |
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