Session 8 Exercises copy.docx - Session 8 Exercises Problem 1 Kate the strategic planner at the Grand Hotel in Moscow is analyzing the monthly budget

# Session 8 Exercises copy.docx - Session 8 Exercises Problem...

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Session 8: Exercises Problem 1: Kate, the strategic planner at the Grand Hotel in Moscow, is analyzing the monthly budget verses actual numbers. Based on the hotel’s given criteria, she must determine if the budget variances are significant: - Revenue \$5,000 and 4% - Fixed expenses \$100 only - Variable expenses \$500 and 2% Selected revenues and expenses for the past month are as follows: Budget Actual \$ variance % variance S/NS Room sales \$200,000 \$196,000 -4,000 -2% NS Food sales 50,000 56,000 6,000 12% S Cost of food sold (V) 15,000 16,000 1,000 66.7% S Labor (F) 10,000 9,700 -300 -3% S Labor (V) 15,000 15,200 200 1.33% NS Supplies (V) 2,500 2,700 200 8% S Franchise fees (V) 4,000 4,480 480 12% S Depreciation (F) 6,000 6,000 0 0% NS Insurance (F) 2,000 2,050 50 2.5% NS Property taxes (F) 3,000 3,000 0 0% NS Required: 1) Complete the two variance columns above. 2) Identify each variance as either significant (S) or not significant (NS).
Problem 2: Janice’s SPA has identified eight major categories of costs. The following table is the budget and actual data for March. She also estimated a cost formula for each cost. Janice’s SPA Planning Budget For the Month Ended March 31 Budget Flexible Buget 1,100 Actual Variance Flexible Variance Budgeted guest visits 1,000 1,100 1,100 100 0 Revenue (\$180.00 pp) \$180,000 \$198,000 \$194,200 14,200 -3,800 Expenses : Labor costs (\$65,000 + \$37.00 pp) 102,000 105,700 106,900 4,900 1,200 SPA supplies (\$1.50 pp) 1,500 1,650 1,620 120 -30 Guest gratuities (\$4.10 pp) 4,100 4,510 6,870 2,770 2,360 Electricity (\$1,500 + \$0.10 pp) 1,600 1,610 1,550 -50 -60 Rent (\$28,500) 28,500 28,500 28,500 0 0 Liability insurance (\$2,800) 2,800 2,800 2,800 0 0 Employee health insurance (\$21,300) 21,300 21,300 22,600 1,300 1,300

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• Spring '20
• Self number, 496, Week-day names, Chef Ours

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