Question
University Inn's most recent monthly expense analysis report revealed significant cost overruns. The manager was asked to explain the deviations. Below is the budget v.
University Inn's most recent monthly expense analysis report revealed significant cost overruns. The manager was asked to explain the deviations. Below is the "budget v. actual" expense report for the month in question.
| Actual | Budget |
Fire insurance on the hotel building | $2,200 | $2,000 |
Towels used in the gym | 500 | 400 |
Room cleaning supplies | 300 | 200 |
Flowers for the reception desk | 600 | 800 |
Staff wages | 60,000 | 55,000 |
Management salaries | 49,500 | 45,000 |
Utilities | 11,000 | 10,000 |
Maintenance | 35,000 | 30,000 |
Total | $159,100 | $143,400 |
The Inn has observed that towels used in the gym, room cleaning supplies, staff wages, and utilities all vary with activity. The other costs are fixed.
The university's football team was on a winning streak and numerous alumni were returning to campus in October, resulting in a 90% occupancy rate during the month. The preceding budget was based upon an assumed 60% occupancy rate.
Calculate total budgeted expenses based on a 90% occupancy rate.
A. $176,200
B. $171,200
C. $148,100
D. $143,400
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