| 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 | 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) |
| $ 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 budget reflected above was based upon an assumed 80% occupancy rate. The university’s football team was on a winning streak and numerous alumni were returning to campus in October, resulting in a 96% occupancy rate during the month.
Prepare a "flexible budget" based upon a 96% occupancy rate, and identify whether the Inn is being efficiently or inefficiently run. Comment on specific costs, and note why a flexible budget can improve performance evaluations.
An example of the first line of the budget is provided below:
| Actual | Budget | Variance | |
| Utilities | $52,000 | $54,000 | $2,000 under budget |
| Actual is already at 96% capacity | The budget was 45,000 assuming 80% capacity. To convert to 96% capacity: 45,000 divide by 0.8 = 56,250 (representing 100% capacity) X > 0.96 = 54,000 |
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more
Recent Comments