2. A motel had budgeted an occupancy of 8,000 rooms with a selling price of $82
ID: 2528679 • Letter: 2
Question
2. A motel had budgeted an occupancy of 8,000 rooms with a selling price of $82 per room and a variable housekeeping cost of $4.40 per room. Actual data indicated that a total of 8,480 rooms were sold at an average selling price of $77 per room and the actual cost of housekeeping per room was $4.90 per room. Answer the following about the housekeeping costs: a. What is the budget variance? Is it favorable or unfavorable? b. What is the cost variance? Is it favorable or unfavorable? c. What is the volume variance? Is it favorable or unfavorable? d. What is the cost volume variance? Is it favorable or unfavorable? 2. A motel had budgeted an occupancy of 8,000 rooms with a selling price of $82 per room and a variable housekeeping cost of $4.40 per room. Actual data indicated that a total of 8,480 rooms were sold at an average selling price of $77 per room and the actual cost of housekeeping per room was $4.90 per room. Answer the following about the housekeeping costs: a. What is the budget variance? Is it favorable or unfavorable? b. What is the cost variance? Is it favorable or unfavorable? c. What is the volume variance? Is it favorable or unfavorable? d. What is the cost volume variance? Is it favorable or unfavorable? 2. A motel had budgeted an occupancy of 8,000 rooms with a selling price of $82 per room and a variable housekeeping cost of $4.40 per room. Actual data indicated that a total of 8,480 rooms were sold at an average selling price of $77 per room and the actual cost of housekeeping per room was $4.90 per room. Answer the following about the housekeeping costs: a. What is the budget variance? Is it favorable or unfavorable? b. What is the cost variance? Is it favorable or unfavorable? c. What is the volume variance? Is it favorable or unfavorable? d. What is the cost volume variance? Is it favorable or unfavorable?Explanation / Answer
a) Budget Variance :-
= (8000*$4.40) - (8480*$4.90)
= $35200 - $41552
= $6352 F
b) Cost Variance :-
= Actual Room Occupancy * (Standard Cost - Actual Cost)
= 8480 * ($4.40 - $4.90)
= 8480 * 0.5
= $4240 U
c) Volume Variance :-
= 8000 - 8480
= 480 F
d) Cost Volume Variance :-
= Standard Cost * Volume Variance
= $4.4 * 480
= $2112 F
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.