The following situations are independent of each other:

Situation 1:

A hotel had budgeted an occupancy of 9,000 rooms with a variable housekeeping cost of $5.50 per room. Actual data indicated that a total of 9,300 rooms were sold at an actual cost of housekeeping of $6.30 per room.

Situation 2:

A restaurant had a budgeted number of 300 customers for lunch meal. The budgeted selling price of lunch meal is $15.00 with a variable cost of $3.20 per meal. The lunch meal was actually sold to 380 customers at a selling price of $15.50 per meal with the variable cost of $3.30 per meal.

Required:

1. For the housekeeping cost in Situation 1, calculate the following variances and indicate whether the variance is favourable or unfavourable:

1. Budget variance
2. Cost variance
3. (iii)Sales volume variance

2. For the lunch meal in Situation 2, calculate the following variances and indicate whether the variance is favourable or unfavourable:

1. Budget variance

(ii) Sales (revenue) variance

(iii) Sales (volume) variance

3. Explain any Two purposes of preparing a budget.