John Oyler Is The Rooms Department Manager Of The Runners Cl

John Oyler Is The Rooms Department Manager Of The Runners Club The Wa

J ohn Oyler is the rooms department manager of the Runners Club. The wages budget for his department is divided between fixed and variable expenses. The work standard for room attendants is to clean two rooms per hour. The average wage rate per hour is $8.00. The variable wages budget for room attendants for June is $8,400 based on $8.00 per hour, 100 rooms, 30 days a month, and 70 percent occupancy. During June, room attendants worked 1,140 hours and the average hourly pay was $7.80. In addition, 2,300 rooms were cleaned.

Required: Determine the budget variance for room attendant variable wage expense. Is the budget variance determined in #1 above significant? Explain Rate John's performance in managing the room attendants. Support your discussion with specific numbers.

Paper For Above instruction

Introduction

The management of hotel operations heavily relies on the efficient management of costs, particularly wages, which constitute a significant portion of operating expenses. In this context, John Oyler, as the Rooms Department Manager at The Runners Club, is tasked with overseeing the room attendants' wage expenses. This paper evaluates the budget variance for the room attendants' variable wages for June, assesses the significance of this variance, and discusses John's management performance based on specific numerical evidence.

Understanding the Budget and Actual Wages

The budgeted variable wage expense was set at $8,400 for June, based on an hourly wage rate of $8.00, and a work standard of two rooms per hour per attendant. The calculation assumed 100 rooms to be cleaned daily over 30 days with a 70% occupancy rate. This indicates that the budget was formulated to cover the costs of labor for the expected workload, maintaining efficiency standards.

In contrast, the actual wages paid to the attendants totaled $8,868. This figure is derived from the actual hours worked and the actual hourly wage paid, which averaged $7.80 during June. The actual hours worked by attendants were 1,140 hours, which suggests a very close alignment with the expected workload but under a slightly lower wage rate than budgeted.

Calculating the Budget Variance

The budget variance for wages is calculated as the difference between the actual wages incurred and the budgeted wages:

Budget Variance = Actual Wages - Budgeted Wages

Replacing the known values:

Budget Variance = $8,868 - $8,400 = $468

This variance indicates that the department spent $468 more than the budgeted amount for wages in June.

Significance of the Variance

To assess whether the $468 variance is significant, it is essential to consider its proportion relative to the total budget. The variance represents about 5.57% of the budgeted wages ($468 / $8,400). Conventionally, variances exceeding 5% are often deemed significant in hospitality financial management because they may indicate underlying issues such as inefficiency, wage rate fluctuations, or misestimations during budgeting.

Given this standard, the variance here is marginally above the threshold for significance, suggesting that it warrants managerial attention but may not be critical.

Analysis of Variance Causes

Several factors could have contributed to this variance:

- Actual Wage Rate: The actual average wage was $7.80, slightly lower than the budgeted $8.00, which would generally reduce costs. However, total wages still exceeded the budget, possibly due to increased hours worked or overtime.

- Hours Worked: The attendants worked 1,140 hours; if this exceeded the hours planned based on the number of rooms and standard productivity, it could lead to higher expenses.

- Efficiency and Productivity: Slight deviations from the standard rate of two rooms per hour (productivity levels) may have impacted total labor costs.

John Oyler’s Performance in Managing Room Attendants

Evaluating John's performance involves analyzing how effectively he managed the labor costs relative to standards:

- Cost Control: The actual wages, though slightly over the budget, were close, indicating solid cost control. The actual hourly wage rate of $7.80 was below the standard $8.00, showing effective wage management or negotiations.

- Work Efficiency: The team cleaned 2,300 rooms in June, aligning with the planned workload considering 70% occupancy and 30 days, which indicates he maintained productivity levels.

- Variance Management: The small positive variance reflects well on his ability to oversee staffing and wage expenses efficiently, despite slight overrun.

However, the slight overspending suggests room for improvement in forecasting or scheduling. Further review might analyze whether the extra hours worked could be reduced through efficiency initiatives, such as better training or optimizing staffing schedules.

Conclusion

In conclusion, the budget variance for June's room attendant wages was $468, representing a 5.57% excess over the budget. Its significance is borderline, meriting managerial focus but not indicative of serious mismanagement. John Oyler demonstrated effective cost management by controlling wages below the standard rate and maintaining productivity. That said, ongoing attention to staffing efficiency and precise forecasting could further optimize labor costs.

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