This case is a continuation of the Burburr Resorts & Hotels Corporation serial case that began. The components of the Burburr serial case can be completed in any order. Burburr Resorts & Hotels Corporation is a fictitious corporation.

Housekeeping is a significant cost in running a hotel; housekeeping includes daily cleaning of occupied guest rooms and guest bathrooms. After its renovation, the Blue Tower of the Las Vegas Burburr had 550 rooms. What follows is a table of selected data regarding housekeeping costs in the Blue Tower for the past year:

Requirements:
1. Calculate the Labor Rate Variance (LRV) for the Blue Tower housekeeping.
LRV = Actual Hours × (Actual Rate − Standard Rate). Answer the following questions about the LRV:

a. Is the LRV favorable or unfavorable? How do you know?

b. What are some possible reasons for this labor rate variance?
2. Calculate the Labor Efficiency Variance (LEV) for the Blue Tower housekeeping. Hint:
LEV = Standard Rate × (Actual Hours − Standard Hours ). Answer the following questions about the LEV:

a. Is the LEV favorable or unfavorable? How do you know?

b. What are some possible reasons for this labor efficiency variance?

Transcribed Image Text:

Data table for Blue Tower housekeeping usage STANDARD DATA-Blue Tower Standard hours per hotel room cleaning Total standard housekeeping hours-Blue Tower 0.25 30,112.5 Standard average housekeeper wage rate per hour $15.00 Budgeted number of rooms to be cleaned 120,450 ACTUAL DATA-Blue Tower Actual hours per hotel room cleaning Total actual housekeeping hours-Blue Tower Actual average housekeeper wage rate per hour Actual number of rooms cleaned 0.30 36,483.6 $16.50 121,612