Aunt Janes Inns most recent monthly expense analysis report revealed significant cost overruns. The manager was asked to explain the deviations. Below is the budget v. actual expense report for the month in question.

	Actual	Budget	Variance
Utilities	85,678.00	71,300.00	(14,378.00)
Laundry	31,538.00	26,400.00	(5,138.00)
Food Service	59,800.00	54,000.00	(5,800.00)
Rent/taxes	95,000.00	95,000.00	-
Staff Wages	91,500.00	88,700.00	(2,800.00)
Management Salaries	65,000.00	68,000.00	3,000.00
Water	23,690.00	17,000.00	(6,690.00)
Maintenance	31,400.00	28,000.00	(3,400.00)
	483,606.00	448,400.00	(35,206.00)

The Inn has observed that utilities, water, food service, staff wages, and laundry costs all vary with activity. The other costs are fixed. The budget reflected above was based upon an assumed 80% occupancy rate. The universitys football team was on a winning streak and numerous alumni were returning to campus in October, resulting in a 92% occupancy rate during the month.

Prepare a flexible budget based upon a 92% occupancy rate, and identify whether the Inn is being efficiently or inefficiently run. Comment on specific costs, and note why a flexible budget can improve performance evaluations.

Hint - Use the table above and leave "actual" column unchanged. Calculate new budgeted and variance columns.