NHM 310 OPERATIONS BUDGETING HWQZ CHP1014 NAME SCORE Amy Ho

NHM 310- OPERATIONS BUDGETING - HW/QZ (CHP10-14) NAME: SCORE Amy Howe is the dining room manager of the Marathon Club. The wages budget for her department is divided between fixed and variable expenses. The work standard for waitpersons is to serve 12 members per hour. The average wage rate per hour is $6.00. The variable wages budget for waitpersons for June is $14,400 based on $6.00 per hour, eight-hour shifts, 30 days in the month, and 10 waitpersons. Given the work standard, this is also based on servicing 28,800 people. During the month of June, the waitperson wages totaled $15,600. During June, 2,500 hours were worked, and the average hourly pay was $6.24 per hour. In addition, 29,200 members were provided service by the waitpersons. Required: 1. Determine the budget variance for waitperson variable wage expense. 2. Determine the volume variance. 3. Determine the efficiency variance. 4. Determine the rate variance.

Solution

Solution 1:

Budget variance for wait person variable wage expense = Budgeted wage expense - Actual wage expense = $14,400 - $15,600 = $1,200 U

Solution 2:

Volume variance = (Budgeted hours - Standard hours for actual people served) * SR

= (28800/12 - 29200/12) * $6 = $200 U

Solution 3:

Efficiency variance = (SH - AH) * SR = (29200/12 - 2500) * $6 = $400 U

Solution 4:

Rate variance = (SR - AR) * AH = ($6 - $6.24) * 2500= $600 U