Kalamazoo Zoo Case

Group 8
Ankita Priya
Dikshma Paul Choudhury
Kurakula Mahesh
Niharika Anand
Rajnigandha
Rohit Nangal
Somya Kumari
Trisha Kapoor
Q1. Revenue and Expenditure
Variance

Variance Type Actual Budget Variance Favourable/

Amount Unfavourable
Revenue $850000 $820000 $30000 Unfavourable

Expenditure $1070000 $820000 $250000 Unfavourable

Revenue and Expenditure Variance are unfavourable

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 Q2. Ticket Revenue Variance
Actual Budgeted Budgeted Variance F/U
Quantity Quantity Price

Quantity 10,000 15,000 $8 $40,000 U

Actual Budgeted Actual Variance F/U

Price Price Quantity

Price $10 $8 10,000 $20000 F

Revenue Quantity variance is unfavourable whereas price

variance for annual ticket is favourable.

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 Q3. Animal Food Expenditure Variance
Actual Budgeted Budgeted Variance F/U
Quantity Quantity Price

Quantity 120 100 $2400 $48,000 U

Actual Budgeted Actual Variance F/U

Price Price Quantity

Price $3000 $2400 120 $72000 U

Both Variances are unfavourable. The zoo under budgeted

both the quantity and price for animal food expenditure.

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 5a) Increase ticket prices to $15.00. Rory believes this might reduce the number of visitors to the Zoo by
20%.Therefore, increasing the ticket price will still resort in a loss of revenues of $80,000. Although you could cut back
in staff costs or overtime costs with less visitors.

Revenues Actual Budget Variance Favorable/Unfavorable

Tickets $120,000 $100,000 $20,000 Favorable

License $100,000 $100,000

Donations $50,000 $50,000

Grants $400,000 $400,000

Subsidies $100,000 $200,000 -$100,000 Unfavorable

Total revenues $770,000 $850,000 -$80,000 Unfavorable

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5 b) Reduce the number of animals to 100 by finding other host programs. There would be a one-time cost of transportation of $1000 each.Therefore, it is
hard to calculate exactly how much they could save because you don’t know how long they spend on each animal (cleaning their cages and feeding them)
and how much overtime they could cut out of overtime but I’m sure this could help them break even by bringing the overtime costs back into budget
potentially.
Expenditures Actual Budget Variance Favorable/Unfavorable

Salaries $80,000 $80,000

Assistant Keeper $100,000 $100,000

Animal Handlers $100,000 $100,000

Security $50,000 $50,000

Fringe Benefits $130,000 $130,000

Food $300,000 $360,000 $60,000 Favorable

Overtime $100,000 $100,000

Utilities $50,000 $50,000

Transportation $100,000 $100,000

Host Program $20,000 $0 -$20,000 Unfavorable

Total Expenditures $1,030,000 $1,070,000 $40,000 Favorable

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5 c)Fire one of the two assistant zookeepers . This will require a severance payment equal to 10% of the annual salary and a
payment of full fringe benefits for 6 months.By getting rid of the zookeeper this may result in more overtime pay for the other
zookeepers and may cause it to be more expensive.

Expenditures Actual Budget Variance Favorable/Unfavorable

Salary $80,000 $80,000

Assistant Keeper $55,000 $100,000 45,000 Favorable

Animal Handlers $100,000 $100,000

Security $50,000 $50,000

Fringe Benefits $19,697 $130,000 9,848 Favorable

Food $360,000 $360,000

Overtime $100,000 $100,000

Utilities $50,000 $50,000

Transportation $100,000 $100,000

Total Expenditures $914,697 $1,070,000 155,303 Favorable 7

THANK YOU

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