Finance/Accounting Task

Learning Goal: I’m working on a accounting discussion question and need an explanation and answer to help me learn.

The Inn has observed that utilities, water, food service, staff wages, and laundry costs all vary with activity. The other costs are fixed. The budget reflected above was based upon an assumed 80% occupancy rate. The university’s football team was on a winning streak and numerous alumni were returning to campus in October, resulting in a 96% occupancy rate during the month.


Prepare a “flexible budget” based upon a 96% occupancy rate, and identify whether the Inn is being efficiently or inefficiently run. Comment on specific costs, and note why a flexible budget can improve performance evaluations.

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