The Gourmand Cooking School runs short cooking courses at itssmall campus. Management has identified two cost drivers it uses inits budgeting and performance reports—the number of courses and thetotal number of students. For example, the school might run twocourses in a month and have a total of 61 students enrolled inthose two courses. Data concerning the company’s cost formulasappear below:
| Fixed Cost per Month | Cost per Course | Cost per
Student |
| Instructor wages | | | $ | 2,950 | | | |
| Classroom supplies | | | | | $ | 270 | |
| Utilities | $ | 1,240 | $ | 75 | | | |
| Campus rent | $ | 4,600 | | | | | |
| Insurance | $ | 2,300 | | | | | |
| Administrative expenses | $ | 3,700 | $ | 45 | $ | 7 | |
|
For example, administrative expenses should be $3,700 per monthplus $45 per course plus $7 per student. The company’s sales shouldaverage $890 per student.
The company planned to run four courses with a total of 61students; however, it actually ran four courses with a total ofonly 59 students. The actual operating results for September appearbelow:
| Actual |
| Revenue | $ | 51,390 |
| Instructor wages | $ | 11,080 |
| Classroom supplies | $ | 16,320 |
| Utilities | $ | 1,950 |
| Campus rent | $ | 4,600 |
| Insurance | $ | 2,440 |
| Administrative expenses | $ | 3,733 |
|
Required:
1. Prepare the company’s planning budget for September.
2. Prepare the company’s flexible budget for September.
3. Calculate the revenue and spending variances forSeptember.
