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 is the Big Ben View Hotel's flexible budget variance for variable housekeeping costs in March?

Question

Quizplus · Accepted Answer

The flexible budget variance for variable housekeeping costs is the difference between the actual variable housekeeping costs and the flexible budget variable housekeeping costs. The flexible budget variable housekeeping costs are calculated by multiplying the actual number of room sales by the variable housekeeping cost per room. The variable housekeeping cost per room is calculated by dividing the budgeted variable housekeeping costs by the budgeted number of room sales.In this case, the actual number of room sales is 2,310 and the variable housekeeping cost per room is $20,000 / 2,200 = $9.09. Therefore, the flexible budget variable housekeeping costs are 2,310 * $9.09 = $21,000.The actual variable housekeeping costs are $20,800. Therefore, the flexible budget variance for variable housekeeping costs is $21,000 - $20,800 = $200 (favourable).

Use the Following Information to Answer the Next Two Questions