Problem
John Evans has been working as assistant to the executive housekeeper at a 624-room resort in Boca Raton, Florida for six months. John has been left in charge of the department for the two weeks while his boss is on vacation. On May 15, he receives a call from Carol Collins, the property's controller; requesting a labor cost forecast for the month of June. John is told that the budgeted occupancy for the month has been downgraded because of the cancellation of three large conventions that had been previously booked. Carol provides John with the following information:
Budgeted occupancy in June 90 percent
New occupancy forecast for June 75 percent
Average section housekeeper hourly wage $ 10.50
Budgeted monthly team supervisors and Housepersons total labor cost $ 24,100
Budgeted monthly laundry labor cost $ 19,760
Budgeted monthly fixed team labor cost $ 11,800
Budgeted evening team labor cost $ 7,100
Budgeted monthly management team salaries $ 10,400
John knows that the section housekeeper workload for one 8-hour shift is 15 rooms. He decides not to change the labor cost for the fixed and management teams but to reduce the laundry budgeted labor cost by 15 percent, the supervisor/housperson's by 8 percent and the evening team's by 5 percent.
Step 1:
Calculate the budgeted departmental costs.
What is the budgeted labor cost?
Step 2:
Calculate the adjusted departmental cost.
What is the adjusted labor cost?
Step 3:
Find the difference between budgeted and adjusted costs.