Question

6. (5 pts) The Magnum Company held a Christmas party. The company expected attendance of 200 people and prepared the following budget: Hotel room rental $850 Food $500 Entertainment $785 Decorations $350 Total Costs $2,485 Two hundred and two people attended the party. The following costs were incurred: Hotel room rental $775 Food $640 Entertainment $1,050 Decorations $350 Total Costs $2,815 What is the variance for total costs (favorable or unfavorable), what is the primary reason for the variance in total costs?

Answer 1

ANSWER. Budgeted total cost is $2,485 for 200 people, actually 202 people have attended the Since the However, party, New Budgeted Total lost $2.435 200 people x 202 People - $ 2509.85 Actual Total cost = $2,815 Un favourable Total - Cost = $305. 15 ($2815-$2509.85 varliance The perimary reason for unfavourable variance in Total cost is due to high Entertainment (ost incurred actually as Compared to Budgeted -