Assignment;

The costs of Cooks are fixed at 2400 per month and there an extra variable cost of 0.25 per guest day.

Catering assistants, there is a fixed cost of 3,500 per month and there is an extra variable cost of 0.25 per guest day.

Food costs are variable per guest day.

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) 6,000 9,000 12,000

Costs 1610 2120 3130

Required:

1. Using the data, prepare a flexible budget and a revised budget report comparing actual performance with the flexed budget. (17marks)

2. Assess what advantages and disadvantages the Balanced Scorecard approach to performance measurement would have for the catering department. (8 marks)

Flexed budgets: Bay-View Bay-View is a family holiday complex on the west coast of Wales. It charges weekly fees to guests that include all accommodation costs, leisure facilities and one evening meal. The General Manager is under pressure to improve the profitability of 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-View holiday complex 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 a budget statement for the month of June 2012. Budget Actual Variance Number of guest days 9,600 10,800 E E Staff costs: Catering manager 2,520 2,520 0 Cooks 4.800 5.200 400 (A) Catering assistants 5.900 6.800 900 (A) Non staff costs: Food 28,800 30,000 1,200 (A) Semi variable costs 2,222 2,100 122 (F) Fixed costs 3,000 2,800 200 (F) Total 47,242 49,420 2,178 (A) In addition to the information above you also establish the following: . The catering manager is paid a fixed monthly salary. . The costs of Cooks are fixed at $2400 per month and there