The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers 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 62 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:
Fixed Cost per Month Cost per Course Cost perStudent
Instructor wages $ 2,970
Classroom supplies $ 310
Utilities $ 1,230 $ 65
Campus rent $ 4,900
Insurance $ 2,400
Administrative expenses $ 4,000 $ 46 $ 4
For example, administrative expenses should be $4,000 per month plus $46 per course plus $4 per student. The company’s sales should average $890 per student.
The company planned to run four courses with a total of 62 students; however, it actually ran four courses with a total of only 52 students. The actual operating results for September were as follows:
Actual
Revenue $ 52,280
Instructor wages $ 11,160
Classroom supplies $ 19,070
Utilities $ 1,900
Campus rent $ 4,900
Insurance $ 2,540
Administrative
expenses $ 3,858