Bill Jenkins runs \"Dog Lovers Ltd\" a dog boarding kennels, mainly aimed at holiday makers leaving their dogs when they go away. The kennels has a capacity for 40 dogs per day. The normal rates are 22 per day for large dogs and 18 per day for small dogs. Each dog is checked on arrival to ensure that there is nothing which could be passed on to other dogs. The checks are done by a vet which costs 20 per dog per visit and a groomer charging 15 per dog per visit. These checks are essential and are paid for by "Dog Lovers Ltd". If a dog requires further visits from the vet, the customer is charged at a rate of 150% of the vet's fees. For budget preparation purposes, the average stay is 10 days, although in practice the number of days may be different. To create this budget, the mix of dogs is assumed to be 50% large and 50% small. Feed costs 1.00 per day per dog irrespective of the size of the dog. Bill Jenkins is not an accountant but has tried to prepare a master budget for the financial quarter to 31.12.20 based on the information above. The budget, the actual performance and the variances he has prepared are shown below: Dog Lovers Performance Report for 3 months (91days) ended 31.12.2020 Budget Standard: Master Actual Variance* (per Dog per Budget Net income Day) Number of dogs boarded @ Number of boarding days 3640 3560 160(A)' Revenues g g g g Boarding Fees 20.00 72,800 71,240 1 560(A) Additional vet fees 9 450( F) Total revenues 72,800 71,690 1 110 A Less variable expenses Feed & supplies 1.00 3,640 3,866 226(A) Veterinary fees 2.00 7,280 11,300 4,020 (A) Grooming fees 1 50 5,460 8,250 2 790 (A) Total variable expenses .50 16,380 23 416 7 036(A) Contribution margin 15.50 56,420 48,274 8,1461A) Less fixed expenses Depreciation & insurance 6,000 6,000 0 Rates, light and heat 3,000 3,200 200 (A) Regairs maintenance 1,000 400 500 (F) Labour M 18 800 800 A Total xed expenses 28,000 28 400 400(A) Net income @420 19,874 8,546(A) *F = Favourable A = Adverse Bill Jenkins is concerned about the much lower profit for the quarter compared to the budget. Except for favourable variances on fixed expenses for repairs and maintenance and the money for additional vet charges everything is unfavourable. The supplier of Feed and Supplies warned Bill that these costs would increase by 10% (based on the figures used in the budget), so the kennels have attempted to take care not to waste food. Kennel fees charges and veterinary and grooming rates have stayed the same during the period
