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 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 50 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

For example, administrative expenses should be $3,270 per month plus $15 per course plus $4 per student. The company’s sales should average $800 per student. The actual operating results for September appear below:

Required:

1.         The Gourmand Cooking School expects to run three courses with a total of 45 students in September. Prepare the company’s planning budget for this level of activity.

2.         The school actually ran three courses with a total of 42 students in September. Prepare the company’s flexible budget for this level of activity.

3.         Prepare a flexible budget performance report that shows both activity variances and revenue and spending variances for September.

Transcribed Image Text:

Cost per Cost per Fixed Cost per Month Course Student Instructor wages S3,080 Classroom supplies $260 Utilities $870 $130 $4,200 Campus rent $1,890 Insurance Administrative expenses $15 $3,270 $4