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).

Answer 1

	Actual results	Revenue and spending variance		Flexible budget	Activity variances		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