Question

Instructor wages Classroon supplies Utilities Campus rent Insurance Administrative expenses Fixed Cost Cost Cost per per per Month Course Student $2,980 $310 $1,200 $ 60 $5, 100 $2,100 $3,700 $ 41 $ 5 For example, administrative expenses should be $3,700 per month plus $41 per course plus $5 per student. The company's sales should average $890 per student The company planned to run four courses with a total of 61 students; however, it actually ran four courses with a total of only 57 students. The actual operating results for September appear below: Actual Revenue $51,390 Instructor wages $11.200 Classroom supplies $18,76 Utilities $ 1.850 Campus rent $ 5,100 Insurance $ 2,240 Administrative $ 3,595 expenses Required: Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Input all amounts as positive values.) Gourmand Cooking School Flexible Budget Performance Report For the Month Ended September 30 Actual Flexible Results Budget Planning Budget Courses Students 571 Revenue S51.390 Expenses Instructor wages 11.200 Classroom supplies 18,7601 Ulties 1,850 Campus rent 5.100 Insurance 2.240 Administrative expenses 3,595 Total expense 4227457 Net operating income TS 86457

Answer 1

Flexible Budget performance Report Revenue & Spending Variances Activity Variances Planning Budget Actual Results Flexible Budget 57 51,390 $ 57 50,730 660 $ F 61 $ 54,290 $ 3,560 NONE F U $ $ 1.240 Courses Number of students Revenue Expenses Instructor wages Classroom supplies Utilities Campus Rent Insurance Administrative Expense Total Expenses Net operating Income $ NONE $ 11,200 18,760 1,850 5,100 2,240 3,595 42,745 8,645 $ $ $ $ $ $ $ $ 720 1,090 410 - 140 554 366 294 11,920 17,670 1,440 5,100 2,100 4,149 42,379 8,351 $ $ $ $ $ $ $ $ NONE NONE NONE F F $ 11,920 $ 18,910 $ 1,440 $ 5,100 $ 2,100 $ 4,169 $ 43,639 $ 10,651 F $ 20 1,260 2,300 F $ While calculating flexible budget actual units are used and budgeted per unit cost and per unit revenue is considered. Revenue & Spending Variance = Actual Results - Flexible Budget Variance in Expense is favorable when actual expense is less than Flexible budgeted expenses. Variance in Expense is Unfavorable when actual expense is more than Flexible budgeted expenses. Variance in Revenue is favorable when actual revenue is more than Flexible budgeted revenue. Variance in Revenue is unfavorable when actual revenue is less than Flexible budgeted revenue. Activity Variance = Flexible budget - Planning Budget Variance in Expense is favorable when Flexible budgeted expense is less than Planning budgeted expenses. Variance in Expense is Unfavorable when Flexible budgeted expense is more than Planning budgeted expenses. Variance in Revenue is favourable when Flexible budgeted revenue is more than Planning budgeted revenue. Variance in Revenue is unfavorable when Flexible budgeted revenue is less than Planning budgeted revenue. Working: Flexible Budget 890 x 57 Planning Budget 890 x 61 Revenue Instructor wages Classroom supplies Utilities Campus Rent Insurance Administrative Expense 2980 x 4 310 x 57 1200 + (60 x 4) 5100 2100 3700 + (41 X 4) + (5 x 57) 2980 x 4 310 x 61 1200+ (60 x 4) 5100 2100 3700 + (41 x 4) + (5 x 61)