Question

Thomas Paine is the dining room manager of the athens club the wages budget for his department is diviided between fixed adn variable expenses. The work stadard for waitpersons is to serve 10 members per hour. The avergae wage rate per hour is $8.00 the variable wages budget for waitpersons for june is based on $8.00 per hour, eight-hour shits, 30 days in the month and an average of eight waitpersons per day. during the month of june the waitpersons wages totaled 17000 for 2000 hours of work the waitpersons served 24000 memebrs determine the following table:

Customers Hours Hourly Rate. Total
Budget
Actual
Difference

2. Explain whether the budget variance determined above the significant. Assume variance significance criteria of 5 percent and $1,000.
3. Rate Paine's performance in managing the waitpersons. Support your discussion with specific numbers.
4. What is the volume variance for variable wage expense for the waitstaff for the month of June?
5. what was the budgeted waitstaff cost per cover and how does it compare with the actual?

Answer 1

Diff

2

80

0.5

1)

2) Significant variance is 5% or $1000

Actual Variance

	Customers’	Hours	Hourly rate	Wages
Actual	12	2000	8.5	17000
Budgeted	10	1920	8	15360
Budgeted Variance	2	80	0.5	1640
Significant variance	=10*5%=.50	=1920*5%=96	=8*5%=.4	$1000(given in the question)

In all the above cases budgeted variance is above the significant variance expect in hours variance as the budgeted is 80 Hrs but significant is 86Hrs

3) In actual waitpersons served 24000 members over 2000 work hours I,e 12 persons per hour but in budgeted its 10 persons per hour only. In achieving positive variance Paine’s performed well and saved man-hours of 400(2000*(12-10)/10)

4) Volume variance means difference between the actual hours consumed vs budgeted hours consumed multiplied by the standard cost per man hour

(Actual Man hours-Budgeted Man hours)*Standard cost per hour

=(2000-1920)*8=640

5) Budgeted wait staff cost per hour is (8*8)=$64, but in actual is (8*8.5=$68),here this budgeted cost is $8 per hour for serving 10 customers but in actual they served 12 customers per hour due to this they received extra payment of .5$ per hour and this is reasonable because they need to pay around $9.6 per hour ($8 for 10 customers I,e $.80 per customer but in actual they served 12 customers I,e 12*$.80=$9.6)