1
The Kalamazoo Zoo QUESTION 1: Perform a revenue and expenditure variane on the !""# Kalamazoo $ud%et $a&ed on the information information provided provided in Ta$le 1' State State (hether (hether the revenue revenue variane variane i& favora$le or unfavora$le' State (hether the expenditure variane i& favora$le or unfavora$le' U&e template )1 $elo( to %uide *our anal*&i&'
Variance type
actual
budget 820,000
Variance amount 30 ,000
Favorable/unfavorabl e favorable
Revenue variance Expenditure variance
850,000 ,0!0,000
820,000
250,000
unfavorable
QUESTION !: U&in% the additional operatin% data on Kalamazoo provided in Ta$le !+ ompute revenue ,uantit* variane and prie variane for annual ti-et revenue and &tate (hether eah i& favora$le or unfavora$le' .hat do (e -no( a$out the zoo from doin% thi& anal*&i&/
Revenue Variance
"ctual #uantity
$udgeted #uantity
#uantity
0,000
5,000
Revenue Variance
"ctual price
)rice
% 0
$udgeted price
Variance
Favorable/ unfavorable
% 8 &00
%'0,000
(nfavorable
$udgeted price
"ctual #uantity
Variance
Favorable/ unfavorable
%8
0 ,0 0 0
%20,000
Favorable
For #uantity ba*ed revenue variance, t+e re*ult i* related to t+e #uantity of actual vi*itor* and budgeted vi*itor*& From t+e analy*i* e can -no +o t+e revenue c+ange* along it+ t+e #uantity c+ange of vi*itor*& For price ba*ed revenue variance, t+e re*ulted i* related to t+e difference beteen t+e actual price and t+e budgeted price& From t+e analy*i* e can -no +o t+e revenue c+ange along it+ different tic-et price& QUESTION 0: U&in% U&in% the the data data prov provid ided ed in Ta$le !+ ompu ompute te expe expendi nditur turee ,u ,uant antit it* * and and prie prie variane variane for animal animal food food expendi expenditur ture& e& and &tate (hether (hether eah i& favora$ favora$le le or unfavora$le' .hat do (e learn a$out the Zoo from doin% thi& anal*&i&/
Revenue Variance
"ctual #uantity
$udgeted #uantity
$udgeted price
Variance
Favorable/ unfavorable
2
#uantity
20
0 0
%2 ,'00
%'8,000
(nfavorable
Revenue Variance
"ctual price
$udgeted price
"ctual #uantity
Variance
Favorable/ unfavorable
)rice
%3,000
2 0
%!2,000
(nfavorable
%2,'00
.+e expenditure for animal food depend on to factor* t+e #uantity of animal* and t+e price of t+e food& .+e expenditure ill increa*e it+ t+e increa*e of eit+er animal* food or t+e amount of animal*& .+e price related variance ill c+ange if t+e food price c+anged or t+e mount of demand increa*e& For example, becau*e of t+e inter *torm*, t+e eat+er i* more cold t+an u*ual& .+i* may bring a re*ult t+at t+e animal* need more food to -eep t+eir arm& 1n t+e ot+er +and, t+e more demand of t+e food may al*o cau*e by t+e increa*e of t+e amount of baby animal*& .+e #uantity variance depend* on t+e c+ange of t+e #uantity of animal*& n t+e c+art e can *ee, t+e actual #uantity i* more t+an budget #uantity& .+e rea*on be+and t+e amount c+ange can be varying& "* *ay* in t+e ca*e t+e eat+er bring* a great *ucce** in t+e animalbreeding program, t+ere are ne baby animal* in t+e 4oo& "not+er rea*on for t+e difference may be becau*e be cau*e t+e 4oo boug+t ne animal* t+i* year& QUESTION : .hat .h at i& the the over overal alll &itu &ituat atio ion n at the the zoo zoo that that (e &ee &ee from from perf perfor ormi min% n% the& the&ee variane&/ 2evie(in% the&e i&&ue& and the $ud%et+ (hat el&e &hould 2or* 3*on& inve&ti%ate/ .hat information i& needed to $e a$le to perform the&e anal*&e&/
"fter revieed t+e *everal variance*, found t+e 4oo +a* more unfavorable t+an favorable& Fir*t, t+e number of vi*itor* +a* a one t+ird le** t+an budgeted& "lt+oug+ t+e actual tic-et price price i* +ig+er t+an budgeted budgeted price, t+e 4oo *till *till got a %20,000 lo*e on t+eir revenue& "not "not+e +err unfa unfavo vora rabl blee i* t+e t+e expe expendi nditu ture re for for anim animal al* * food& food& it+ it+ mo more re babi babie* e* breeding, t+e co*t of t+e food increa*ed& +ile, per*onally t+in- t+i* may not a bad t+ing& f t+e 4oo agree, t+ey can *ell t+e babie* to ot+er 4oo*, t+en get a profit& .+e profit t+ey get from *elling t+e babie* mu*t +ig+er t+an t+e food price t+ey feed t+e babie*&
6onation* Variance
"ctual 7uality
$udget 7uantity
$udgeted )rice
Variance
Favorable/(nfavorable
7uantity
,000
5 00
%20 0
%00,000
Favorable
6onation* Variance
"ctual )rice
$udget )rice
"ctual 7uantity
Variance
Favorable/(nfavorable
)rice
%50
% 2 00
00 0
%50,000
(nfavorable
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oreover, from t+e data of t+e 4oo, t+ere ill be a 500 increa*e in t+e number of donation* +ic+ ill bring* a %00,000 profit to t+e 4oo& +ile, t+e value of eac+ donation ill decrea*e %50, +ic+ ill bring a %50,000 unfavorable lo**& "* a re*ult of t+e*e, t+e 4oo ill +ave a %50,000 unfavorable variance& n addition, t+e actual overtime co*t %00,000 i* too muc+ more t+an t+e budgeted %'0,000, +ic+ may bring more pre**ure to t+e revenue& Rory 9yon* *+ould con*ider *ome *trategie* li-e *etting limit* and rotation *y*tem& QUESTION 4: 5& he (a& (or-in% on hi& $ud%et anal*&i&+ 2or* 3*on& reeived a phone all from the 6a*or' The 6a*or &aid that due to &tate $ud%et ut$a-&' The Zoo &hould expet to reeive 71""+""" le&& in &tate &u$&idie& for the omin% *ear' 8aed (ith thi& &ituation+ (hih of the follo(in% option& (ould *ou reommend to 2or* 3*on& for lo&in% the $ud%et &hortfall/ 9alulate the net $ud%etar* impat for eah of the&e option& u&in% the atual $ud%et:
: ncrea*e tic-et price* to %5&00& Rory believe* t+i* mig+t reduce t+e number nu mber of vi*itor* to t+e ;oo by 20<& 120,000
80001!
100,000
100,000
100,000
!0,000 &00,000 100,000 ((0,000
!0,000 &00,000 200,000 8!0,000
20,000
FV
100,000 ;"+"""
UN UN
2: Reduce t+e number of animal* to 00 by finding ot+er +o*t program*& .+ere ould be a onetime co*t of tran*portation of %000 eac+&
80,000 100,000 100,000 !0,000 10,000 00,000 100,000 !0,000 100,000 20,000 100,000
000100
201000
80,000 100,000 100,000 !0,000 10,000 0,000 100,000 !0,000 100,000 0 10(0,000
0,000
FV
20 20,000
UN
&0,000
FV
<"+"""
4
3: Fire one of t+e to a**i*tant 4oo-eeper*& .+i* ill re#uire a *everance payment e#ual to 0< of t+e annual *alary and a payment of full fringe benefit* for = mont+*& >ote t+e 4oo-eeper* are not t+e *ame people a* t+e animal +andler*&
80,000 !!,00 !,000 0 100,000 !0,000 121,8(! 0,000 100,000
!0000 00006 6071 071!0 !000 000 0
10000/8(7!
80,000 100 100,000 ,000 100,000 !0,000 121,8(! 0,000 100,000
!0,000
!0,000
100,000 101,8( !
100,000 10 10,8(! ,8(!
&!,0 &!,000 00 FV
812!
FV
!1,1 1,12! 2!
FV
<+;=4
UN
e can *ee from t+e c+art*, t+e re*ult* for t+e t+ree option* are all unfavorable& per*onally recommend Rory 9y 9yon* on* c+oo*e t+e option 3, a* it +a* t+e lea*t unfavorable variance&
