(SOLVED) The Corporate Caterers Ltd specializes in catering for office parties


Question Description:

$20

The Corporate Caterers Ltd specializes in catering for office parties. Over the past six months, business has started to pick up, particularly as the number of ’employee farewell’ parties has increased in the larger corporation. A performance report, which contains comparisons between actual and budgeted revenues and costs, is produced at the end of each month. Budgeted costs were developed last year and are based on an average of two parties per week. However, the company is currently catering for three parties per week.
Heidi Brown, the manager of The Corporate Caterers, says she has little use for the monthly performance report. She is pleased that monthly sales revenue variances are favourable, but does not understand why cost variances are unfavourable.
Required:
1. Explain why monthly revenues may be favourable and cost variances unfavourable.
2. How might The Corporate Caterers improve its monthly performance reporting?
3. Explain to Heidi the advantages of expending the monthly performance report to include non-financial measures?

Answer

$20