The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that it uses in 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 64 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
|
|
|
$
|
2,960
|
|
|
|
Classroom supplies
|
|
|
|
|
$
|
280
|
|
Utilities
|
$
|
1,250
|
$
|
55
|
|
|
|
Campus rent
|
$
|
4,700
|
|
|
|
|
|
Insurance
|
$
|
2,000
|
|
|
|
|
|
Administrative expenses
|
$
|
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 actual operating results for September appear below:
|
Revenue
|
$
|
54,060
|
|
Instructor wages
|
$
|
11,120
|
|
Classroom supplies
|
$
|
17,770
|
|
Utilities
|
$
|
1,880
|
|
Campus rent
|
$
|
4,700
|
|
Insurance
|
$
|
2,140
|
|
Administrative expenses
|
$
|
3,610
|
1. The Gourmand Cooking School expects to run four courses with a total of 64 students in September. Complete the company's planning budget for this level of activity.
2. The school actually ran four courses with a total of 58 students in September. Complete the company's flexible budget for this level of activity.