“Are you sure you read it right?” asked Ahmed, the restaurant manager at the Golden Rose restaurant. Ahmed was talking to Bart, the restaurant’s bar manager. “I read it right, and it’s great news!” replied Bart. Ahmed and Bart were discussing the restaurant’s most recent income statement. It showed that the amount spent in the “cost of beverage” expense category represented 22% of beverage sales. The operation was budgeted to achieve a 27% cost of beverage expense. “You told me to do a good job controlling costs,” said Bart, “and my crew was able to reduce our costs by 5%; we went from a 27% beverage cost down to a 22% cost!” “The way I see it,” replied Ahmed, “we budgeted for a 27% beverage cost based on the drink sizes we wanted to serve, and this income statement says you reduced our beverage cost by 18.5%. And I have to tell you, that concerns me quite a bit!” 

1. Based on the information provided, what was the variance percentage for cost of beverages at the Golden Rose as shown on the income statement these managers are discussing? 

2. What do you think is the cause for Ahmed’s concern? Would you be concerned if you were Ahmed? Why or why not?