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 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

$

2,980

Classroom supplies

$

310

Utilities

$

1,240

$

60

Campus rent

$

5,200

Insurance

$

2,300

Administrative expenses

$

3,700

$

42

$

4

For example, administrative expenses should be $3,700 per month plus $42 per course plus $4 per student. The companys sales should average $860 per student.

The actual operating results for September appear below:

Actual

Revenue

$

52,140

Instructor wages

$

11,200

Classroom supplies

$

19,690

Utilities

$

1,890

Campus rent

$

5,200

Insurance

$

2,440

Administrative expenses

$

3,550

1. The Gourmand Cooking School expects to run four courses with a total of 64 students in September. Complete the companys planning budget for this level of activity.

Gourmand Cooking School
Planning Budget
For the Month Ended September 30
Revenue	$55,040
Expenses:
Instructor wages	11,920
Classroom supplies	19,840
Utilities	1,480
Campus rent	5,200
Insurance	2,300
Administrative expenses	4,124
Total expense	44,864
Net operating income	$10,176

2. The school actually ran four courses with a total of 56 students in September. Complete the companys flexible budget for this level of activity.

Gourmand Cooking School
Flexible Budget
For the Month Ended September 30
Revenue	$48,160
Expenses:
Instructor wages	11,920
Classroom supplies	17,360
Utilities	1,480
Campus rent	5,200
Insurance	2,300
Administrative expenses	4,092
Total expense	42,352
Net operating income	$5,808

Required:

3. Complete the 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.)

Flexible Budget Performance Report
For the Month Ended September 30
	Revenue and Spending Variances		Activity Variances
Revenue		F	$6,880	U
Expenses:
Instructor wages		F	0	None
Classroom supplies		U	2,480	F
Utilities		U	0	None
Campus rent	0	None	0	None
Insurance		U	0	None
Administrative expenses		F	32	F
Total expense		U	2,512	F
Net operating income		F	$4,368	U