Assignment By My Lecturer

Bay-View is a family holiday complex on the west coast of Wales. It charges weekly fees to guests thatinclude all accommodation costs,leisurefacilitiesandone evening meal.TheGeneral Manager is under pressure to improvetheprofitabilityof the holiday complex.

Bay-View operates a budgetary control system and gives responsibility to line managers to ensure they operate within their budget. The General Manager of the Bay-Viewholidaycomplex is quite concerned about the adverse overspends in the Catering Department and has asked you as a new management trainee to look at the financial performance of the department.

Below is abudget statement forthe month ofJune 2012.

In addition to the information above you also establish the following:

Semi-variable costs:

The semi-variable costs include a variable cost(per guest day and which is constant at all activity levels)and a stepped fixed cost which changes when the activity level exceeds 10,000 guest days.

A further analysis of the production overhead cost is shown below:

Activity(guest days)6,0009,00012,000

Costs161021203130

Required:

(17marks)