Question

Julie Miller supervisor of housecleaning for Hotel Minto, was surprised by her summary report for March given below.

Hotel Minto Housekeeping Performance Report For the month of March
Actual	Budget	Variance	%Variance
$198,511	$186,400	$12,111 U	6.497% U

Julie was disappointed. She thought she had done a good job controlling housekeeping labor and towel usage, but her performance report revealed an unfavorable variance of $12,111. She had been hoping for a bonus for her good work, but now expected a series of questions from her manager.

The cost budget for housekeeping is based on standard costs. At the beginning of a month, Julie receives a report from Hotel Minto’s Sales Department outlining the planned room activity for the month. Julie then schedules labor and purchases using this information. The budget for the housekeeping was based on 8,000 room nights. Each room night is budgeted based on the following standards for various materials, labor, and overhead:

Shower supplies	3 bottles @ $0.35 each
Towels	1 @ $2.25
Laundry	10 lbs @ $0.35 a lb.
Labor	½ hour @ $14.00 an hour
VOH	$7.00 per labor hour
FOH	$6 a room night (based on 8,000 room nights

With 8,900 room nights sold, actual costs and usage for housekeeping during April were:

$9,311 for 26,500 bottles of shower supplies

$17,502 for 7,900 towels

$31,882 for 88,500 lbs. of laundry

$60,200 for 4,350

$30,150 for total VOH

$49,466 for FOH

Required:

You have been asked to re-evaluate Julie’s performance. Prepare a report to Julie’s boss demonstrating and explaining your findings; including your suggestions for performance evaluation methods and measures in the future.

Answer 1

Particulars	standard	amount	actual	difference
Shower bottles	8900*3*0.35	9345	9311	34 favorable
Towels	8900*1*2.25	20025	17502	2523 f
Laundary	8900*10*0.35	31150	31882	732 unf
Labour	8900*0.5*14	62300	60200	2100 f
VOH	8900*0.5*7	31150	30150	1000 f
FOH	6*8000(bcoz fixed Remain fixed)	48000	49466	1466 unf
Total		201970	198511	3459 favorable

As per this report, Julie has saved 3459 as per the budgeted expense.

Manger should compare the data with budgeted cost for actual room nights with the actual cost.

Instead of comparing budgeted cost with the actual cost.