Discussion post 1...Aunt Janes 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.
Actual
Budget
Variance
Utilities
85,678.00
71,300.00
(14,378.00)
Laundry
31,538.00
26,400.00
(5,138.00)
Food Service
59,800.00
54,000.00
(5,800.00)
Rent/taxes
95,000.00
95,000.00
-
Staff Wages
91,500.00
88,700.00
(2,800.00)
Management Salaries
65,000.00
68,000.00
3,000.00
Water
23,690.00
17,000.00
(6,690.00)
Maintenance
31,400.00
28,000.00
(3,400.00)
483,606.00
448,400.00
(35,206.00)
The Inn has observed that utilities, water, food service, staff wages, and laundry costs all vary with activity. The other cost
are fixed. The budget reflected above was based upon an assumed 80% occupancy rate. The university's football team
on a winning streak and numerous alumni were returning to campus in October, resulting in a 92% occupancy rate du
the month.
Prepare a ""flexible budget"" based upon a 92% 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.
Discussion post 2....Setting standard costs are one of the most important items in creating a budget. Discuss who should be setting the standards? Why? What considerations should the standards have? What should management consider as they set standards? How can they be used to motivate employees?
ANSWER this question only>> give a summary on what you learned from both discussion post?