Kamas Gym is a fitness and aerobic center located in Knowles, Oklahoma. The following table reports the
Question:
Kamas Gym is a fitness and aerobic center located in Knowles, Oklahoma. The following table reports the gym's master budget and actual results for the most recent year:
With regard to the discrepancies between the budgeted and actual membership fee and the budgeted and actual number of members, the owner of Kamas Gym, J Kamas, informs you that in early January he decided to raise the membership fee from $500 to $550. J believed that such an action would only reduce the number of members by 500 rather than 1,000, as actually occurred.
Required:
a. What is Kamas' total profit variance for the most recent year?
b. What is Kamas' sales volume variance and sales price variance for the most recent year? Did raising the membership fee turn out to be a good idea?
c. Would raising the membership fee have been a good idea if membership decreased by 500 (as predicted) rather than 1,000 members?
Step by Step Answer:
Managerial Accounting
ISBN: 978-1118385388
2nd edition
Authors: Ramji Balakrishnan, Konduru Sivaramakrishnan, Geoff B. Sprinkle