David Green is the manager of Store 88 of Pet Groom & Clean (PG&C). Bonus program of PG&C will reward store managers who improve their performance over that of the budget 20% or more. In 2010, David implemented some changes in price and promotion in order to cut costs and increase revenue. He decreased price on Tuesday, Wednesday, Thursday to get more customers and increase price on Friday, Saturday, and Monday to balance the promotion price he offered in other days of the week. As a result, actual number of customers visits the store increase from 20% to 30%. In term of costs, David saved the labor costs through his careful scheduling and effective management. Actual labor-hour was at 2250 hours. Table below is the comparison between budget and actual store performance in 2010 under David’s management.
| Actual| Budget|
Number of customers| 10,500| 10,000|
% Tue-Thurs period| 30%| 20%|
% Fri-Mon period| 70%| 80%|
Price| | |
Tue-Thurs period| 18.00 | 25.00 | Fri-Mon period| 30.00 | 25.00 | Materials Cost | | |
Tue-Thurs period| 2.20 (*)| 2.00 | Fri-Mon period| 2.20 (*)| 2.00 | employee hours per year| 2,250 | 2,500 | Variable expense per clean| 1.85 (**)| 1.50 | Wage rate| 13.50 | 12.00 | Number of employees| 3| 3 |
Calculate from Operating Statement
(*) Food cost or material cost per service: 23,100 / 10,500 = 2.2 (**) Other variable cost: 19,425 / 10,500 = 1.85...