Question

Roberds Tech is a for-profit vocational school. The school bases its budgets on two measures of activity (i.e., cost drivers), namely student and course. The school uses the following data in its budgeting:

	Fixed element per month			Variable element per student			Variable element per course
Revenue	$	0		$	268		$	0
Faculty wages	$	0		$	0		$	3,040
Course supplies	$	0		$	46		$	34
Administrative expenses	$	26,200		$	21		$	46

In March, the school budgeted for 1,850 students and 82 courses. The school's income statement showing the actual results for the month appears below:

Roberds Tech
Income Statement
For the Month Ended March 31
Actual students		1,750
Actual courses		85
Revenue	$	381,340
Expenses:
Faculty wages		211,950
Course supplies		59,590
Administrative expenses		69,562
Total expense		341,102
Net operating income	$	40,238

Required:

Prepare a flexible budget performance report showing both the school's activity variances and revenue and spending variances for March. Label each variance as favorable (F) or unfavorable (U). (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.)

Answer 1

	Actual results	Revenue and Spending variance		Flexible budget	Activity variance		Planning budget
Students	1750			1750			1850
Courses	85			85			82
Revenue	381340	87660	U	469000	26800	U	495800
Expenses:
Faculty wages	211950	46450	F	258400	9120	U	249280
Course supplies	59590	23800	F	83390	4498	F	87888
Administrative expenses	69562	2702	U	66860	1962	F	68822
Total expense	341102	67548	F	408650	2660	U	405990
Net Operating income	40238	20112	U	60350	29460	U	89810