This case is a continuation of the Caesars Entertainment Corporation serial case that began in Chapter 1. Refer to the introductory story in Chapter 1 (see page 43) for additional background. (The components of the Caesars serial case can be completed in any order.) Housekeeping is a significant cost in running a hotel; housekeeping includes daily cleaning of occupied guest rooms and guest bathrooms. Before the late 2015 renovation, the Roman Tower, formerly known as the Julius Tower, had 567 rooms. What follows is a table of selected hypothetical data regarding 2015 housekeeping costs in the Roman Tower:
Data table for Roman Tower housekeeping usage5
STANDARD DATA - Roman Tower 2015
Standard hours per hotel room cleaning.................................................0.25
Total standard housekeeping hours in 2015-Roman Tower..................36,399.25
Standard average housekeeper wage rate per hour.................................$ 14.50
Budgeted number of rooms to be cleaned in 2015.................................147,375
ACTUAL DATA - Roman Tower 2015
Actual hours per hotel room cleaning...................................................0.30
Total actual housekeeping hours in 2015-Roman Tower.....................43,679.10
Actual average housekeeper wage rate per hour....................................$ 13.50
Actual number of rooms cleaned in 2015..........................................145,597
Requirements
1. Calculate the Labor Rate Variance (LRV) for the Roman Tower housekeeping in 2015.
a. Is the LRV favorable or unfavorable? How do you know?
b. What are some possible reasons for this labor rate variance?
2. Calculate the Labor Efficiency Variance (LEV) for the Roman Tower housekeeping in 2015.
a. Is the LEV favorable or unfavorable? How do you know?
b. What are some possible reasons for this labor efficiency variance?