Answer:
The Gourmand Cooking School
1. Planning Budget for 4 courses and 64 students:
Fixed Cost Cost Cost Total
per month per Course per Student
Instructor wages $2,910 x 4 $11,640
Classroom supplies $310 x 64 19,840
Utilities $1,250 $55 x 4 1,470
Campus rent $4,900 4,900
Insurance $2,100 2,100
Administrative
expenses $3,600 $42 x 4 $3 x 64 3,960
Total expenses $43,910
Sales Revenue $870 x 64 $55,680
Operating profit $11,770
2. Flexible Budget for 4 courses and 56 students:
Fixed Cost Cost Cost Total
per month per Course per Student
Instructor wages $2,910 x 4 $11,640
Classroom supplies $310 x 56 17,360
Utilities $1,250 $55 x 4 1,470
Campus rent $4,900 4,900
Insurance $2,100 2,100
Administrative
expenses $3,600 $42 x 4 $3 x 56 3,936
Total expenses $41,406
Sales Revenue $870 x 56 $48,720
Operating profit $7,314
3. Flexible Budget Performance Report for September:
Actual Flexible Budget Variance
Cost Revenue Cost Revenue
Revenue $52,780 $48,720 $4,060 F
Instructor
wages $10,920 $11,640 720 F
Classroom
supplies 19,690 17,360 2,330 U
Utilities 1,880 1,880 0 None
Campus rent 4,900 4,900 0 None
Insurance 2,240 2,240 0 None
Administrative
expenses 3,386 3,386 0 None
Total
expenses $43,016 43,016 $41,406 41,406 1,610 U
Operating income $9,764 $7,314 2,450 F
Explanation:
a) Data:
1. Cost Formulas:
Fixed Cost Cost Cost Total
per month per Course per Student
Instructor wages $2,910
Classroom supplies $310
Utilities $1,250 $55
Campus rent $4,900
Insurance $2,100
Administrative
expenses $3,600 $42 $3
Sales Revenue $870
2. Actual operating results for September:
Revenue $52,780
Instructor wages $10,920
Classroom supplies 19,690
Utilities 1,880
Campus rent 4,900
Insurance 2,240
Administrative expenses 3,386
Total expenses $43,016 43,016
Operating income $9,764
3. Budget planning is an important aspect of managing The Gourmand Cooking School. It helps to make some educated forecasts about its future activities, performance, and position. With it, actual performances and positions can be compared and across different units of the organization. Budget planning and its performance reporting aid management in controlling the organization towards achieving its goals. It also creates motivation, propelling the organization toward a better future.
