Question

Compute the variance analysis for a hotel’s restaurant and indicate the reasons for the gain or loss in revenue. The hotel’s budget for restaurant revenue is $673,428 based on total covers of 37,961 and an average guest check of $17.74. The property’s actual restaurant revenue is $655,295 with covers totaling 31,429 and an average guest check of $20.85.

Answer 1

Ans: Variance Analysis will be combined of both price variance and Quantity Variance

Price Variance = (Actual rooms occupied * Budgeted room rate) - (Actual rooms occupied * Actual room rate)

= (31,429 * $17.74) - (31,429 *$20.85)

= $557,550.46 - 655,295

= $97,744.56  unfavorable

Quantity Variance

= (Budgeted rooms occupied * Budgeted room rate) - (Actual rooms occupied * Budgeted room rate)

= Budgeted revenue for 37,961 - (31,429 * $17.74)

= $673,428-557,550.46

= 115,877.46 Favorable.

= $765,247.55 Unfavorable