The following situations are independent of each other: 1: A hotel had budgeted an occupancy of 18,000
Question:
The following situations are independent of each other:
1:
A hotel had budgeted an occupancy of 18,000 rooms with a variable housekeeping cost of $11 per room. Actual data indicated that a total of 18,600 rooms were sold at an actual cost of housekeeping of $12.60 per room.
2:
A restaurant had a budgeted number of 600 customers for lunch meal. The budgeted selling price of lunch meal is $30.00 with a variable cost of $6.40 per meal. The lunch meal was actually sold to 760 customers at a selling price of $31 per meal with the variable cost of $6.60 per meal.
Required:
(a) For the housekeeping cost in Situation 1, calculate the following variances and indicate whether the variance is favourable or unfavourable:
(i) Budget variance
(ii) Cost variance
(iii) Qty volume variance
(b) For the lunch meal in Situation 2, calculate the following variances and indicate whether the variance is favourable or unfavourable:
(i) Budget variance
(ii) Sales (revenue) variance
(iii) Sales (volume) variance
(c) Explain any TWO (2) purposes of preparing a budget.
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso