The Kalamazoo Zoo Harvard Case Solution & Analysis

The Kalamazoo Zoo Case Solution

ANSWER NO.1

The actual revenue that the zoo has made during the year was greater than the expected revenue. The expected or budgeted revenue was $820,000 as compared to the actual revenue of $850,000.

Thus, the revenue variance is the difference between the budgeted and the actual revenue, as a result the revenue variance is calculated as $30,000 favorable. The revenue is favorable because the revenue generated is more than expected. While looking at the revenue items, it is apparent that the more revenue is resulted because of the more than expected state grant.

The total actual expenditure incurred is more than the budgeted expenditure, which was $820,000. While the actual expenditure incurred is $1070, 000. Therefore, the variance is calculated as $250,000 unfavorable. By looking at the details, the reason for the excess expenditure is majorly due to the increased food cost, overtime and public facilities.

Variance TypeActualBudgetVarianceFavorable/Unfavorable
Revenue Variance85000082000030000Favorable
Expenditure Variance1070000820000-250000Unfavorable

ANSWER NO.2

While further analyzing the revenue variance with the perspective of ticketing, revenue price and revenue quantity variance have been calculated. The actual number of visitors is less than the budgeted. The reason for the less number of visitors is due to the bad weather conditions. Not only the bad weather has made the visitors eliminate zoo visit, but also due to the stormy weather and rains the zoo was closed for the visitors many times during the year. Both reasons justify the less number of visitors. Moreover, it can also be anticipated that the people are not being attracted to the zoo because there might be other zoo in the region that is more attractive or other recreational entertainment zones and centers has taken big share of visitors.Whatever the reason is the less number of visitors has created the revenue quantity variance to be unfavorable by $40,000.

On the other hand,the number of visitors is less than the budgeted, the actual price charged per ticketis higher. The reason of the high ticket charges might indicates that the zoo management might increases the prices to meet the increasing expenditures. This also enumerates that the one of the reason of low visitor population is due to the higher ticket prices that might be less competitive. Another aspect might be that the economic condition or market condition justifies this price increase, thus the increased price is in normal course of business. The increased prices result in favorable revenue price variance of$20,000.

Ticketing
 
Revenue VarianceActual QuantityBudgeted QuantityBudgeted PriceVarianceFavorable/Unfavorable
Quantity10000150008-40000Unfavorable
 
Revenue VarianceActual PriceBudgeted PriceActual quantityVarianceFavorable/Unfavorable
Price1081000020000Favorable

ANSWER NO.3

The expenditure price and quantity variance as per the animal food cost are calculated to further analyze the expenditure variance and the impact of animal food cost in this variance. The actual number of animals is higher than the budgeted. The number of animals has been increased due to the highly successful breeding program. The new born animals require more food and this increase the food expenditure cost. The zoo has better facilities for the breeding program and the weather also adds in this program positively. The expenditure quantity variance has unfavorable variance of $48000.

The expenditure price variance is highly unfavorable with $72,000.Moreover, the prices of the food have been increased as compared to the budgeted price. Thus, the variance is a negative variance. The reason of this increase in price might be the rising inflation or economic condition. Another aspect of this might be that the zoo’s management is inefficient and fails to procure food items at competent prices............

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