Question

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 63 students enrolled in those two courses. Data concerning the company’s cost formulas appear below: Fixed Cost per Month Cost per Course Cost per Student Instructor wages $ 2,970 Classroom supplies $ 280 Utilities $ 1,210 $ 75 Campus rent $ 4,800 Insurance $ 2,100 Administrative expenses $ 3,900 $ 43 $ 5 For example, administrative expenses should be $3,900 per month plus $43 per course plus $5 per student. The company’s sales should average $870 per student. The company planned to run four courses with a total of 63 students; however, it actually ran four courses with a total of only 59 students. The actual operating results for September appear below: Actual Revenue $ 51,910 Instructor wages $ 11,160 Classroom supplies $ 17,490 Utilities $ 1,920 Campus rent $ 4,800 Insurance $ 2,240 Administrative expenses $ 3,813 Required: Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September.

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

	Fixed Cost per Month		Cost per Course		Cost per Student
Instructor wages			$	2,970
Classroom supplies					$	280
Utilities	$	1,210	$	75
Campus rent	$	4,800
Insurance	$	2,100
Administrative expenses	$	3,900	$	43	$	5

For example, administrative expenses should be $3,900 per month plus $43 per course plus $5 per student. The company’s sales should average $870 per student.

The company planned to run four courses with a total of 63 students; however, it actually ran four courses with a total of only 59 students. The actual operating results for September appear below:

	Actual
Revenue	$	51,910
Instructor wages	$	11,160
Classroom supplies	$	17,490
Utilities	$	1,920
Campus rent	$	4,800
Insurance	$	2,240
Administrative expenses	$	3,813

Required:

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

Answer 1