The Toque Cooking Academy

The Toque Cooking Academy 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 four courses in a month and have a total of 60 students enrolled in those four courses. Data concerning the company’s cost formulas appear below:

Fixed Cost per Month

Cost per Course

Cost per
Student

Instructor wages

$

2,980

Classroom supplies

310

Utilities

1,230

85

Campus rent

5,100

Insurance

2,340

Administrative expenses

3,940

46

7

For example, administrative expenses should be $3,940 per month plus $46 per course plus $7 per student. The company’s sales should average $850 per student.

The actual operating results for October appear below:

Actual

Revenue

48,100

11,200

18,450

1,980

2,480

3,970

Required:

1.

The Toque Cooking Academy expects to run four courses with a total of 60 students in October. Complete the company’s planning budget for this level of activity. (Input all amounts as positive values. Omit the “$” sign in your response.)

Toque Cooking Academy
Planning Budget
For the Month Ended October 31

$

Expenses:

Total expense

Net operating income

2.

The school actually ran four courses with a total of 58 students in October. Complete the company’s flexible budget for this level of activity. (Input all amounts as positive values. Omit the “$” sign in your response.)

Toque Cooking Academy
Flexible Budget
For the Month Ended October 31

3.

Complete the flexible budget performance report that shows both activity variances and revenue and spending variances for October. (Input all amounts as positive values. Leave no cells blank – be certain to enter “0” wherever required. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.)

Toque Cooking Academy
Flexible Budget Performance Report
For the Month Ended October 31

Activity Variances

Revenue and Spending Variances