Falafel Hut operates fast food restaurants in the food courts of shopping malls. It’s main product is a serving of falafel that requires ground chick peas (direct material) and food preparation (direct labor).

The April budget for Falafel Hut’s Parkside restaurant was:

Sales 30,600 servings at \($4.50\) each Standard food cost of \($0.75\) per serving (1/3 pound @ \($2.25\) per pound)

Standard direct labor of \($0.50\) per serving (1/30th hour @ \($15.00\) per hour)

Fixed occupancy expenses (equip and rent) of \($8,000\) Actual April performance of the Parkside restaurant was:
* Sales 27,000 servings at \($4.80\) each * Food cost of \($18,490\) for 8,600 pounds ¢ Direct labor cost of \($15,675\) for 1,100 hours * Fixed occupancy expenses of \($8,200\) In early May, the manager received the following financial performance report:

Required

a. Partition variance into variances for 1) selling price and net sales volume, 2) food variances for price and quantity, and 3) labor variances for rate and efficiency.

b. Using the results of your analysis, prepare an alternative reconciliation of budgeted and actual profit. Be sure to include the occupancy variance.

c. Explain why the total variances for sales, food, and labor in your reconciliation differ from those originally presented to the restaurant manager.

Transcribed Image Text:

Revenues Food Cost.. Labor Cost Occupancy Profit.. FALAFEL HUT-PARKSIDE Performance Report For the Month of April Actual Budgeted Variance $129,600 $137,700 $8,100 U (18,490) (22,950) 4,460 F (15,675) (15,300) 375 U $ 87,235 (8,200) $ 91,450 (8,000) 200 U $4,215 U