Question $3$

The Financial Manager of the Grand KSA Hotel has prepared the following flexed budget for

$2024.$ The Grand KSA is a large hotel, which can provide up to a maximum of $48,000$ guest

nights per year.

Capacity

No of Guests $30,80038,20042,600$

AED AED AED

Direct Costs $770,000955,0001,065,000$

Selling overhead $2,386,8002,719,0002,917,000$

Administration overhead $1,500,0001,500,0001,500,000$

Total Cost $4,656,8005,174,0005482$

Due to the recent excessively hot weather, the Sales Manager has suggested that $46,000$

guests is a more realistic target for $2024.$ Based on this, what are the expected total costs for

$2024?$

Critically evaluate why flexing the budget is so important in the planning and control process?