activity variance

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The restaurant at the Hotel Galaxy offers two choices for breakfast: an all-you-can-eat buffet and an a la carte option, where diners can order from the menu. The buffet option has a budgeted meal price of $52. The a la carte option has a budgeted average price of $41 for a meal. The restaurant manager expects that 40 percent of its diners will order the buffet option. The buffet option has a budgeted variable cost of $32 and the a la carte option averages $25 per meal in budgeted variable cost. The manager estimates that 2,600 people will order a meal in any month.

 

For July, the restaurant served a total of 2,400 meals, including 940 buffet options. Total revenues were $49,820 for buffet meals and $62,780 for the a la carte meals.

 

Required:

a. Compute the activity variance for the restaurant for July.

 

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