Dee Flowers owns the most successful catering business in town. December is her busiest month, and she has just completed it. Dee now has a chance to take a moment and evaluate the operations budget she has prepared for December, as well as the actual results achieved by her company. On the facing page are her original operations budget and her actual operating results for the month. Complete the sheet for her, providing variance dollars and variance percentages for each budgeted item, and then answer the questions that follow.

DEE’S CATERING BUDGET VERSUS ACTUAL COMPARISON FOR DECEMBER 2010 Budget % Actual % Variance %

SALES:

Food 185,200 73.9% 193,251 68.4%

Beverage 65,250 26.1% 89,250 31.6%

Total Sales 250,450 100.0% 282,501 100.0%

COST OF SALES:

Food 67,500 36.4% 68,925 35.7%

Beverage 14,500 22.2% 20,415 22.9%

Total Cost of Sales 82,000 32.7% 89,340 31.6%

GROSS PROFIT:

Food 117,700 63.6% 124,326 64.3%

Beverage 50,750 77.8% 68,835 77.1%

Total Gross Profit 168,450 67.3% 193,161 68.4%

OPERATING EXPENSES:

Salaries and Wages 38,750 15.5% 44,850 15.9%

Employee Benefits 9,500 3.8% 14, 2S) 4.0%

Direct Operating Expenses 26,500 10.6% Qe © 9.6%

Music and Entertainment 0 0.0% ., 20 0.0%

Marketing 1,200 0.5% 150 0.1%

Utility Services 3,250 1.3% 3,289 1.2%

Repairs and Maintenance 3,500 1.4% 2,874 1.0%

Administrative and General 24,750 9.9% 25,598 9.1%

Occupancy 1,200 0.5% 1,200 0.4%

Depreciation 2,200 0.9% 2,200 0.8% i:
Total Operating Expenses 110,850 44.3% 118,574 42.0% |
Operating Income 57,600 23.0% 74,587 26.4% l |
Interest 7,100 2.8% 7,100 2.5% |
Income Before Income Taxes 50,500 20.2% 67,487 23.9% -
Income Taxes 12,625 5.0% 16,872 6.0%
Net Income 37,875 15.1% 50,615 17.9% q|

a. What is the variance (dollar and percent) in Dee's total cost of sales for the month of December?

b. To what do you attribute the variance in Dee’s total cost of sales for December?

c. What is the variance (dollar and percent) in Dee’s salaries and wages for the month of December?

d. To what do you attribute the variance in Dee’s salaries and wages for December?

e. What is the variance (dollar and percent) in Dee’s marketing expenses for the month of December?

f. What advice would you give Dee regarding her marketing expense variance?
g. What is the variance (dollar and percent) in Dee’s net income for the month of December?
h. To what do you attribute the variance in Dee’s net income for December?