Question
Given the information below, answer the questions from #32 to #34. As a manager, you want to analyze only significant budget variances on a monthly
Given the information below, answer the questions from #32 to #34. As a manager, you want to analyze only significant budget variances on a monthly basis. Your company recommends the criteria below to determine if the budget variances are significant.
(1) Revenues (sales) | If both $variance exceeds $5,000 and %variance exceeds 4%, the variance is significant. | |||||
(2) Fixed Expenses (F) | If $variance exceeds $100, the variance is significant. | |||||
(3) Variable Expenses (V) | If both $variance exceeds $500 and %variance exceeds 2%, the variance is significant. | |||||
Period: Nov 1-30, 2019 | Budget | Actual | $ Variance | % Variance | Sig/Non-sig | Favorable /Unfavorable |
Room Sales | $200,000 | $196,000 | ||||
Food Sales | $50,000 | $65,000 | ||||
Cost of Food Sold (V) | $15,000 | $16,000 | ||||
Labor (F) | $10,000 | $9,700 | ||||
Labor (V) | $15,000 | $15,200 | ||||
Supplies (V) | $2,500 | $2,700 | ||||
Franchise Fees (V) | $4,000 | $4,480 | ||||
Depreciation (F) | $6,000 | $6,000 | ||||
Insurance (F) | $3,000 | $2,050 | ||||
Property taxes (F) | $3,000 | $3,000 |
What are the $ variance and % variance in Cost of Food sold during this period? Determine whether this variance is significant.
A. -$1,000; - 1.5%; Non-significant
B. $300; 6.67%; Non-significant
C. $1,000; 6.67%; Significant
D. -$1,000; - 6.63%; Significant
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