Use the following information to answer the next two questions. The Big Ben View Hotel predicted $20,000 in variable housekeeping costs and room revenue of $242,000 from 2,200 room sales in its static budget for March. The hotel actually sold 2,310 rooms and incurred $20,800 in variable housekeeping costs in March.
-What would be recorded in the Big Ben View Hotel's flexible budget for variable housekeeping costs in March?

Question

Quizplus · Accepted Answer

The flexible budget adjusts for actual sales levels and their associated costs. Since the hotel sold 2,310 rooms instead of the budgeted 2,200, we can calculate the new variable housekeeping cost using the following formula: (Actual Sales/ Budgeted Sales) x Budgeted Costs
(2,310/2,200) x $20,000 = $21,000. Therefore, the recorded amount in the flexible budget for variable housekeeping costs in March would be $21,000.

Use the Following Information to Answer the Next Two Questions