Solved assignments and essays for Faculty of Business, Law & Tourism - Desklib

Faculty of Business, Law
& Tourism

Contents
QUESTION 1.................................................................................................................................................3
QUESTION 3.................................................................................................................................................4
QUESTION 4.................................................................................................................................................6
(c) Explain how you would determine which variance to examine further in relation to a work
performance?..........................................................................................................................................7
QUESTION 6.................................................................................................................................................8
6. What is meant by a product’s contribution margin (CM) ratio? How is this ratio useful in planning
business operations?...............................................................................................................................9

QUESTION 1
The cost formula can be worked given below:
When the occupancy rate is 80%, no beds = 550 * 80% = 440
Therefore, the number of days without occupied beds = 440 * 30 = 13200
Total operating cost for 30 days = 13200 * 32 = $422,400
When 60% is occupied, no bed = 550 * 60% = 330
Therefore, the number of days without a bed = 330 * 30 = 9900
Total operating costs for 30 days = 326700
Use high-low method
Difference in sleeping days = 80%-60% = 20% * 550 * 30 = 90 * 30 = 3300 sleeping days
Operating cost difference = 422400 - 326700 = 90,700
Therefore, the daily variable cost per bed = 95700/3300 = $29
Fixed costs = 60% of total operating costs - 60% of variable costs on the day of stay
That is FC = 326700 - 9900 * 32 = 39600
Cost function, C = 39600 + 7 * B
Where C = total cost
B = number of days in bed
2. For a 70% occupancy rate, the number of bedtimes is 550 * 70% * 30 = 11550
Therefore, operating cost = 39600 + 7 * 11550 = 394,482
3. Given information for the activity level of 6800 units
1 Total variable cost 125,188
2 The total fixed cost. 164,152