The data you have to work with, at least for now, are as follows: Actual attendees: 1,234
Question:
The data you have to work with, at least for now, are as follows:
Actual attendees: 1,234
Expected attendees: 1,220
Actual cost per dinner: £58
Budgeted cost per dinner: €60 (The budget was set at the beginning of December 2014.)
Dinner costs (in British pounds) were incurred on May 19, the day of the event.
Dinner costs were invoiced and paid (in euros) on May 21 from EAPC accounts.
Daily midpoint exchange rate information are listed below
Date Cost of £1, in euros
December 1, 2014 €1.25789
December 31, 2014 €1.28261
May 19, 2015 €1.38764
May 21, 2015 €1.40346
Questions:
1- What is the static budget variance (that is, the difference between the original budget and actual results) for the dinner?
2- Break down the static budget variance into a volume variance and a flexible budget variance for the dinner. What do these variances tell you?
3- Break down the flexible budget variance into price and efficiency variances. What do these variances tell you?
4- Break down the price variance into a charge variance and an exchange variance. What do these variances tell you? Note that the charge variance is based solely on the difference between the budgeted price and actual price (based on the currency rate used in the organization’s budget). The exchange variance is based solely on the difference between budgeted exchange rate and the exchange rate actually used in paying the invoice.
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer