A large, downtown hotel allocated all of its restaurant labor costs on the basis of revenue dollars. This hotel had seven restaurant outlets that were vastly different, including banquet, room service, a bar, a 24-hour restaurant, and a fine dining facility. There are obvious differences in the way labor resources are consumed in these various outlets. However, the most glaring example was in the banquet operation. Since banquets were not regularly scheduled events, the banquet manager hired servers as contract laborers. These costs were not included in the restaurant labor pool. Suggest at least two steps the manager should take to ensure that all labor is factored into the profitability analysis. What level of variances should we apply   level 1, 2 or 3. Suggest the variance analysis that would pinpoint the issue with the budget. Provide specific examples.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A large, downtown hotel allocated all of its restaurant labor costs on the basis of revenue dollars. This hotel had seven restaurant outlets that were vastly different, including banquet, room service, a bar, a 24-hour restaurant, and a fine dining facility. There are obvious differences in the way labor resources are consumed in these various outlets. However, the most glaring example was in the banquet operation. Since banquets were not regularly scheduled events, the banquet manager hired servers as contract laborers. These costs were not included in the restaurant labor pool. Suggest at least two steps the manager should take to ensure that all labor is factored into the profitability analysis. What level of variances should we apply   level 1, 2 or 3. Suggest the variance analysis that would pinpoint the issue with the budget. Provide specific examples.

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