The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses i
n its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 61 students enrolled in those two courses. Data concerning the company’s cost formulas appear below: Fixed Cost per Month Cost per Course Cost per Student
Instructor wages $2,950
Classroom supplies $280
Utilities $1,220 $65
Campus rent $4,800
Insurance $2,300
Administrative expenses $4,000 $44 $4
For example, administrative expenses should be $4,000 per month plus $44 per course plus $4 per student. The company’s sales should average $870 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 51 students. The actual operating results for September appear below:
Revenue and spending income from operations variance = $4,566 Favorable
Activity income from operations variance = -$5,860 Unfavorable
Explanation:
Note: See part a of the attached excel file for the flexible budget performance report that shows both revenue and spending variances and activity variances for September.
Also Note: See parts b and c of the attached excel file for the calculations of revenue and spending variances and activity variances respectively for September.
If the temperature of chilled food deliveries is less than or equal to +5°C and frozen food is not greater than –18°C. Food which is delivered at the wrong temperature must be rejected, i hope this helped!
