It is January 2019 and you are reviewing the 2018 income statement for your property. Next week,

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Question:

It is January 2019 and you are reviewing the 2018 income statement for your property. Next week, you and six other general managers will meet in El Paso, Texas with the regional manager for an annual performance review meeting. You gather the data provided below and use variance analysis to understand your results prior to the meeting.

Data from an industry consultant show that the market size in 2018 was 73,363 rooms, and you used this information in calculating your 2018 sales forecast (in Exercises 2 and 3). Today, in January 2019, market data revealed that 60,575 rooms were sold in your area by you and your competitors. Calculate actual (1) market share and (2) average room rate so that you may use these numbers to create flex budgets that enable you to report (1) market size and (2) market share variances.

Variances are computed relative to the budget. Use the budget you prepared in the Sunrise Hotels (D) case.

The following table was obtained from your year-end income statement:

Rooms Rented 15,713

Revenues $ 593,058

Controllable Costs

Front Office 112,191

Housekeeping 56,165

Other Personnel 79,594

Total Personnel 247,950

Supplies 20,601

Other Expense 28,792

Repairs 37,218

Energy 60,795

Utilities 29,394

Total Expense $ 424,750

Controllable Profit $ 168,308

Required

1.What are the Level-0, Level-1, and Level-2 variances for your property? What are the market size, market share, and sales price variances? Hint: Prepare multiple flexible budgets, gradually relaxing assumptions from the static budget to the actual results (the "Turn-one-dial-at-a-time" approach).

2. What are the price and efficiency variances (i.e., Level-3 variances) for housekeeping expenses? To do this, you obtained the following data from the company controller: Housekeepersworked a total of 7,247.1 hours. The standard (budgeted) wage rate was provided in the budgeting case, Sunrise Hotels (D)