Assignment 3

SUBMITTED TO:
SIR NAVEED MUGHAL
GROUP MEMBERS:
SHAMAILA SAFDAR

15121013

SIDRA MALIK

15121016

MBA Finance
Fall 15
SUBMISSION DATE: 10-AUG-2016

Question#1:
Perform a revenue and expenditure variance o the 2009 Kalamazoo budget based on the
information /provided. State whether the revenue and expenditure variance favorable or
unfavorable
Variance Type

Actual

Budget

Variance

Favorable/unfavorable
Favorable
unfavorable

Revenue

850,000

820,000

Amount
30,000

Variance
Expenditure

1070,000

820,000

250,000

Variance

Question#2:
Compute revenue quantity variance and price variance for annual ticket revenue and stete
whether each is favorable or unfavorable?
Ticket Revenue Variance:
Revenue

Actual

Budget

Budgeted

Variance

Favorable/unfavorable

Variance

Quantity

Quantity

Price

Quantity

10,000

15,000

8.00

40,000

unfavorable

Revenue

Actual

Budget

Actual

Variance

Favorable/unfavorable

Variance

Price

Price

Quantity

Price

10

10,000

20,000

Favorable

Question#3:
Compute expenditure quantity variance and price variance for animal food expenditure
and state whether each is favorable or unfavorable?

Animal Food Expenditure Variance:

Expenditure Actual

Budget

Budgeted

Variance

Favorable/unfavorable

Variance

Quantity

Quantity

Price

Quantity

120

100

2400

20

Favorable

Expenditure

Actual

Budget

Actual

Variance

Favorable/unfavorable

Variance

Price

Price

Quantity

Price

30,00

2400

120

720,00

unfavorable

Question#4:
What is the overall situation at the zoo that we see from performing this variance? Review
these issue and the budget, what else should Roy Lyons investigate? What information is
needed to be able to perform these analyses?
By performing the variances, I can see that the Zoo has had an unfavorable year. Ticket
sales were down, however the price per ticket was higher than actually budgeted. What could
have been a $40,000 loss is actually a $20,000 loss due to the price increase. There is an
unfavorable cost increase to animal feed of $600 per animal and this is most likely do to the good
breeding year, an increase of animal population by 20 head, and weird weather for the year.
I see this as a favorable cause for the deficit. Yes the cost to feed the additional heads is
over budget, however each animal is worth x amount of dollars and should increase their bottom
line for assets. They can sell these animals. I also think we need to investigate the ticket price
increase as compared to the decline in number of tickets sold. Did the number of tickets sold
decline due just to the numerous days the zoo needed to close, or was the decline still higher than
that and maybe due to the increase in ticket prices. We need to know the average number of
tickets sold per day, and the amount of days the zoo had to close that it would have normally
been open.