Kalamazoo Zoo Case Study

Variance type

actual budget Variance amount Favorable/unfavorabl

e

Revenue variance 850,000 820,000 30,000 favorable

Expenditure variance 1,070,000 820,000 250.000 unfavorable

Revenue Variance Actual

quantity Budgeted quantity Budgeted price Variance Favorable/ unfavorable

quantity 10,000 15,000 $8.00 S40.000 Unfavorable

Revenue Variance Actual

price Budgeted price Actual quantity Variance Favorable/ unfavorable

Price $10 $8 10,000 $20,000 Favorable

quantity

Revenue Variance

Price

quantity

Revenue Variance

Price 120 !00

Actual Budgeted price price

$3,000 S2,400

120 100

Actual Budgeted price price

S3.000 S2,400 $2,400

Actual quantity

120

$2,400

Actual quantity

120 $48,000 Variance

$72,000 $48,000

Variance $72,000 Unfavorable

Favorable/ unfavorable

Unfavorable

Unfavorable

Favorable/ unfavorable

Unfavorable

What is the overall situation at the zoo that wc sec from performing these variances? Reviewing these issues and the budget, what else should Rory Lyons investigate? What information is needed to be able to perform these analyses?

After reviewed the several variances, I found the zoo has more unfavorable than favorable. First, the number of visitors has a one third less than budgeted. Although the actual ticket price is higher than budgeted price, the 200 still got a $20„000 lose on their revenue.

Another unfavorable is. the expenditure for animals.1 food. With more babies breeding, the cost of the food increased. While, I personally think this may not a bad thing. If the zoo agree, they can sell the babies to other zoos, then get a profit. The profit they get from selling the babies must higher than the food price they feed the babies.

Moreover, from the data of the zoo, there will be a 500 increase in the number of donations which will brings a S100,000 profit to the zoo. While, the value of each donation will decrease $50, which will bring a $150,000 unfavorable loss. As a result of these, the zoo will have a S50,000 unfavorable variance.

In addition, the actual overtime cost $100,000 is too much more than the budgeted $40,000, which may bring more pressure to the revenue. Rory Lyons should consider some strategies like: setting limits and rotation system.

QUESTION 5:

As he was working on his budget analysis, Rory Lyons received a phone call from the Mayor. The Mayor said that due to state budget cutbacks. The Zoo should expect to receive $100,000 less in state subsidies for the coming year. Faced with this situation, which of the following options would you recommend to Rory Lyons for closing the budget shortfall? Calculate the net budgetary impact for each of these options using the actual budget:

1) Increase ticket prices to SI 5.00.

Rory believes this might reduce the number of visitors to the Zoo by 20%.

Revenue: Actual Calculation Budget Varianc