3 Identify each variance as either favorable F or unfavorable U 4 Prepare a

# 3 identify each variance as either favorable f or

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3) Identify each variance as either favorable (F) or unfavorable (U). 4) Prepare a flexible budget and compute the variances, and comment on your calculations. For actual revenue, compared with planning budget, it is favorable because it has \$14,200 amount increase; however, compared with flexible budget (which is the same actual given level), it is unfavorable because it has \$3,800 amount decrease. (sales promotin???) For labor costs, compared with planning budget, it is favorable because it has 4.8% increase (less than revenue 7.89% increase); however, compared with flexible budget (which is the
same actual given level), it is unfavorable because it has 1.14% increase while revenue has 1.92% decrease. For guest gratuities, compared with planning budget, it is unfavorable because it has 67.56% increase (much more than revenue 7.89% increase); compared with flexible budget (which is the same actual given level), it is also unfavorable because it has 52.33% increase while revenue has 1.92% decrease. For total expenses, compared with planning budget, it is favorable because it has 5.97% increase (less than revenue 7.89% increase); however, compared with flexible budget (which is the same actual given level), it is unfavorable because it has 3.27% increase while revenue has 1.92% decrease. For net operating income, compared with planning budget, it is favorable because it has 26.37% increase (much more than revenue 7.89% increase); however, compared with flexible budget (which is the same actual given level), it is unfavorable because it has 30.42% decrease while revenue has 1.92% decrease. Flexible budget -> one step back -> to see real nature of actual number of a company
Problem 3: The Mountain View Hotel uses the simplest time series approach for forecasting monthly revenues. That is, the current year’s revenues by department are multiplied by 1+ x % to forecast the next year’s revenues. The current year’s department revenues for January and percentage increases for the coming year are provided below: Required: 1)

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• Fall '16
• Chef Ours