1. What advice would you GREEN What is the variance (dollar and percent) in Dee's netwo To what do you attribute the variance in Dee's net income for the month of December 7. Watson Wabent has been the executive chef at the Alina Restaurant for five years. Alina Restaurant is located dry area (alcoholic beverage les are illegal), so it only sells food. In the last five years, Watson has worked for several general managers. The new general manager, however, is a real stickler for staying in budget, and at the moment Watson is a bit worried. According to the November's spreadsheet the general manager sent Watson, he exceeded his food cost budget significantly. He felt that his team had performed well but according to the memo got from the owner, he still had to explain his department's sub-par" performance to the owner in person Watson is confused, though. Although he spent more in food cost, he also sold more CONCES, so his food cost she be higher than originally budgeted! Watson decides to calculate a flexible budget based on his actual number of sold to see if he has, indeed, had cost control problems in any of his line items, especially food cost lielp him cale Late his flexible budget, and then answer the questions that follow Altina Restaurant Flexible Budget for November $9.00 November original budget check average 18.000 November original budget number of CONCIS November actual number of 21.000 November actual check average Hexible Unfavorable Variable Dollars Per Cover Variance Favorable Budget Original Budget 18.000 Actual 21,000 21.000 NUMBER OF COVERS $200,000 $9.00 $162,000 $ Sales Food $ $5.12 $1.25 $56,160 $22.500 $60,500 $22.000 $575 LESS VARIABLE COSTS Food Cost Management, Staff, and Benefits Telephone Marketing Utilities Repairs and Maintenance Contribution Margin $1,750 $0.02 $0.08 $0.14 $9.500 $460 $1,410 $2,520 $1,980 $77,040 $0.11 $2,600 $110,075 $4.28 $28,800 $28.800 $28,800 LESS FIXED COSTS Management, Staff, and Benefits Telephone Marketing Utilities Repairs and Maintenance Administrative and General Depreciation Occupancy Costs $360 $5,100 $3,600 $150 $360 $5,400 $3,600 $150 $2,000 $1,000 $5,000 $360 $5,400 $3,600 $150 $2.000 $2,000 $1,000 $5,000 $1,000 $5,000 Test Your Skills 447 INCOME BEFORE TAXES Tax Rate NET INCOME 10% $30,730 $12,292 $18,438 $63,765 $25,506 $38,259 $ a. What was Watson's actual check average? Was this higher or lower than the original budget and flexible budget check average? b. Were Watson's actual food sales higher or lower than the flexible budget? By how much? Was this favorable or unfavorable? c. Was Watson's actual food cost higher or lower than the original budget? Why do you think this is so? d. Was Watson's actual food cost higher or lower than the flexible budget? By how much? Was this favorable or unfavorable? How can Watson use this information in his report to the owner? e. Were Watson's variable management, staff, and benefits higher or lower than the original budget? f. Were Watson's variable management, staff, and benefits higher or lower than the flexible budget? By looking at both the original budget and the flexible budget, what conclusion can you draw about Watson's ability to control his labor costs? g. Was Watson's actual net income higher or lower than the flexible budget? By how much? Was this favorable or unfavorable? h. Overall, how do you think Watson is doing at meeting the budget goals set by the operation's owner? How should he respond to the owner's initial claim that his department is operating at a "sub-par" performance level? Kalvare le an all-organic restaurant located near State University. It is managed by Eunice Ndlovu