Food cost was higher than what was budgeted and you need to create a variance report. What are two questions you would address on the variance report?
Answer (1)
When creating a variance report to address why the food cost was higher than budgeted, it's important to consider a few key questions that can help identify the underlying reasons for the variance. Here are two important questions you might include in the report:
What are the specific factors contributing to the variance in food costs?
Identifying the exact reasons why the costs exceeded the budget is crucial. These factors could include an increase in the price of ingredients, unexpected spoilage of stock, or higher waste than anticipated.
Analyzing purchase records and comparing them with historical data might help pinpoint any anomalies.
Are there any trends or patterns observed over time that might have caused the increase?
Reviewing data over several periods might reveal whether this variance is an isolated incident or part of a recurring pattern.
This can include seasonal fluctuations in food prices or changes in customer demand that were not initially anticipated when budgeting.
Addressing these questions in your variance report can provide a comprehensive overview of the situation, allowing for more informed decision-making. The report can guide management in developing strategies to align future costs more closely with budgets and potentially reveal areas where cost efficiency can be improved.
