Actual Flexible Budget Budgeted
Number of Students 2,340 2,240
Price Per Student 3,175 3,225
Variable Cost Per Student 1,910 1,950
Total Fixed Cost 2,050,000 2,000,000
Actual Flexible Budget Master Budget
Sales Revenue $ 7,429,500 $ 7,546,500 $ 7,224,000
Variable Costs $ 4,469,400 $ 4,563,000 $ 4,368,000
Contribution Margin $ 2,960,100 $ 2,983,500 $ 2,856,000
Fixed Costs $ 2,050,000 $ 2,000,000 $ 2,000,000
Profit $ 910,100 $ 983,500 $ 856,000
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Get Help Now!Assume that a portion of the spending variance for variable costs is due to the cost of purchasing permission for each student to access protected content. The “standard” allows faculty to purchase access for each student 4 times per term at a standard cost of $26.10 per purchase. During the most recent term (when 2,340 students were enrolled), 9,300 purchases were made at an actual cost of $243,660.
Calculate the price, usage (efficiency), and overall spending variance for purchased access (hint: use the DM price and quantity formulas). Label each variance as favorable or unfavorable.
a) Price Variance for Purchased Student Access:
b) Quantity (Usage) Variance for Purchased Student Access :
c) Spending Variance for Purchased Student Access:
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