Question

In: Accounting

University Inn's most recent monthly expense analysis report revealed significant cost overruns. The manager was asked...

University Inn's most recent monthly expense analysis report revealed significant cost overruns. The manager was asked to explain the deviations. Below is the "budget v. actual" expense report for the month in question.

University Inn

Budget vs. Actual Expense Report

For The Month Ending October 31, 20X7

Actual

Budget

Variance

Utilities

$52,000

$45,000

($7,000)

Laundry

20,000

18,000

($2,000)

Food service

41,000

35,000

($6,000)

Rent/taxes

60,000

60,000

$0

Staff wages

57,000

55,000

($2,000)

Management salaries

43,500

45,000

$1,500

Water

13,000

10,000

($3,000)

Maintenance

15,200

15,000

($200)

Total

$301,700

$283,000

($18,700)

The Inn has observed that utilities, water, food service, staff wages, and laundry costs all vary with activity. The other costs are fixed.

The preceding budget was based upon an assumed 85% occupancy rate. The university's football team was on a winning streak and numerous alumni were returning to campus in October, resulting in a 97% occupancy rate during the month.

Prepare a "flexible budget" based upon a 97% occupancy rate, and calculate the total variance.

A.

Total Variance

$5,515

B.

Total Variance

$6,122

C.

Total Variance

$1,736

D.

Total Variance

$4,312

E.

Total Variance

$1,012

Solutions

Expert Solution

Thank you for your patience. Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!
University Inn's
Flexible Budget at 97% A B=A/85%*97%
Particulars Nature Budget (85%) Flexible Budget (97%)
Utilities Variable        45,000.00               51,353
Laundry Variable        18,000.00               20,541
Food service Variable        35,000.00               39,941
Rent/taxes Fixed        60,000.00               60,000
Staff wages Variable        55,000.00               62,765
Management salaries Fixed        45,000.00          45,000.00
Water Variable        10,000.00               11,412
Maintenance Fixed        15,000.00          15,000.00
Total      283,000.00             306,012
Calculation of the total variance:
Particulars Flexible Budget (97%) Actual Variance Remarks
Utilities           51,353        52,000.00                     647 Unfavorable
Laundry           20,541        20,000.00                   (541) Favorable
Food service           39,941        41,000.00                  1,059 Unfavorable
Rent/taxes      60,000.00        60,000.00                        -  
Staff wages           62,765        57,000.00                (5,765) Favorable
Management salaries      45,000.00        43,500.00          (1,500.00) Favorable
Water           11,412        13,000.00                  1,588 Unfavorable
Maintenance      15,000.00        15,200.00               200.00 Unfavorable
Total 306,011.76      301,700.00               (4,312) Favorable
Total Variance is $ 4,312. Option D.

Related Solutions

University Inn's most recent monthly expense analysis report revealed significant cost overruns. The manager was asked...
University Inn's most recent monthly expense analysis report revealed significant cost overruns. The manager was asked to explain the deviations. Below is the "budget v. actual" expense report for the month in question. University Inn Budget vs. Actual Expense Report For The Month Ending October 31, 20X7 Actual Budget Variance Utilities $52,000 $45,000 ($7,000) Laundry 20,000 18,000 ($2,000) Food service 41,000 35,000 ($6,000) Rent/taxes 60,000 60,000 $0 Staff wages 57,000 55,000 ($2,000) Management salaries 43,500 45,000 $1,500 Water 13,000 10,000...
University Inn's most recent monthly expense analysis report revealed significant cost overruns. The manager was asked...
University Inn's most recent monthly expense analysis report revealed significant cost overruns. The manager was asked to explain the deviations. Below is the "budget v. actual" expense report for the month in question. University Inn Budget v. Actual Expense Report For the Month Ending October 31, 2007 Actual (at 96% capacity) Budget (established at 80% capacity) Variance Utilities $ 52,000 $ 45,000 $ (7,000) Laundry 20,000 18,000 (2,000) Food service 41,000 35,000 (6,000) Rent/taxes 60,000 60,000 - Staff wages 57,000...
A recent health report revealed that a woman with insurance spends an average of 2.3 days...
A recent health report revealed that a woman with insurance spends an average of 2.3 days in the hospital following a routine childbirth, while a woman without insurance spends an average of 1.9 days at the hospital. Two samples of 16 women each were used in both samples. The standard deviation of the first sample is equal to 0.6 day, and the standard deviation of the second sample is 0.3 day. At ?=0.01, test the claim that the means are...
What were some of the findings of the most recent (2011) EPA Benefit-Cost Analysis of the...
What were some of the findings of the most recent (2011) EPA Benefit-Cost Analysis of the 1990 Amendments to the Clean Air Act (CAA)?
Tom's Shoe Repair provides a variety of shoe repair services. Analysis of monthly costs revealed the...
Tom's Shoe Repair provides a variety of shoe repair services. Analysis of monthly costs revealed the following cost formulas when direct labor hours are used as the basis of cost determination: Supplies: y=$0+$4.00X Production supervision and direct labor: y=$500+$7.00X Utilities: y=$350+$5.40X Rent: y=$450+$0.00X Advertising: y=$75+$0.00X a. Prepare a flexible budget 250, 300, 350, and 400 direct labor hours. b. Calculate a total cost per direct labor at each level of activity. c. Tom's employees usually work 350 direct labor hours...
. Given the following monthly expense report for EKGs calculate price, efficiency, intensity, and quantity variances...
. Given the following monthly expense report for EKGs calculate price, efficiency, intensity, and quantity variances for each object code. Second write an explanation for why expenses differ from budget, one paragraph per expense line and create a table similar to table 11.4. Discuss how much of these variances the manager may be responsible for. Obj.Code Expenses Actual Budget $ Diff % Diff 4020 Staff Salaries $77,619 $75,000 $2,619 3.49% 4212 Medical Supplies $11,452 $11,875 -$423 -3.56% 4350 Biomedical Repair/Maint....
A. Imagine you are a HRM manager and asked to do a job analysis for a...
A. Imagine you are a HRM manager and asked to do a job analysis for a job title at your company, choose any job title you know or hear about and make a job description and job specification. 10 marks B. Discuss and explain in your own words with relevant examples the “Marketing concept” 15 marks
Review the most recent Report to the Nation on Occupational Fraud and Abuse published by the...
Review the most recent Report to the Nation on Occupational Fraud and Abuse published by the ACFE. Discuss what you found interesting in this report and what impact, if any, you think the legal system and corporate governance have had on reducing fraud?
Prepare a report on Workflow process, Risk analysis and resourcemanagement for the University online Help...
Prepare a report on Workflow process, Risk analysis and resource management for the University online Help desk management system.1.Determine the purpose and importance of project management from the perspectives of planning, tracking and completion of project.2.Evaluate the feasibility of project proposals utilizing appropriate tools, techniques and methods.3.Manage project schedule, expenses and resources with of suitable project management tools.
You are manager of a district that has just hired several recent university and college graduates....
You are manager of a district that has just hired several recent university and college graduates. Most of these people are starting their first full-time job, although most or all have held part-time and summer positions in the past. They have general knowledge of their particular skill area (accounting, engineering, marketing, etc.) but know relatively little about specific business practices and developments. Explain how you would nurture the self-concepts in these new hires to strengthen their performance and maintain their...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT