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PROJECT 3 | VARIANCE ANALYSIS in SERVICE INDUSTRIES FLINT HILLS LODGE CASE Hattie Hughes is reecting on her hotel's performance over the last year. This is her second year as the General Manager of the Flint Hills Lodge, Next week, she will travel to a regional meeting in Omaha to report to the Vice President of Hotel Operations. She has gathered all of the necessary data but requires your team's help to run a variance analysis, interpret the results and prepare her report. The Flint Hills Lodge is a recently renovated, 126-room economy-lodging hotel in El Dorado, Kansas. Built in 1984, the Lodge is part of a privately-owned hotel chain headquartered in Des Molnes, Iowa. The chain owns and operates hotels across the Midwest. Hughes has already prepared a report comparing the original budget to the actual revenue and expense data (see the Project 3 data le, Table 1 Budget and Actual). A description of each account is provided as a tab within the data le. Human Resources provided Hughes with the hours worked by hotel staff (see Table 2 Hours) and Hughes shares the following with your team: 0 The general manager and maintenance worker are normally full-time workers, meaning they work 40 hours per week, 50 weeks a year. c All other workers are considered full time, though many of them work less than 40 hours per week (see Table 2 Hours). a In preparing the budget, Hughes planned on housekeeping staff using a standard time of 30 minutes per room with a wage rate of $7.00 per hour. - The head housekeeper's wage was budgeted at $9.50 per hour for 40 hours a week for 50 weeks a year. With a small staff, the head housekeeper also cleans rooms and Hughes prepared the budget assuming she would spend 2,000 hours cleaning rooms. Hughes tells you that her productivity may actually be lower (meaning she cleans fewer rooms) because of her supervisory duties (inspections and employee training). Accordingly, during slow periods, the head housekeeper may work fewer hours. - Hughes anticipated having one person stafng the front desk at all hours. a With the exception of the general manager, employees do not get paid vacation time. - Further, with high turnover, most employees do not receive benets (healthcare and retirement contributions). Outside of payroll costs, most of the other costs are fixed, with a few exceptions: supplies, credit card commissions, guest vouchers and refunded rentals. REQUIREMENTS: 1. Prepare a flexible budget based on the actual number of rooms rented. Your team should arrive at a total flexible budget of $587,476. Calculate a flexible budget variance for each line item. This portion of the project should be prepared and submitted via Excel
