This case study analysis seeks to identify the reasons why Kalamazoo Zoo is losing money. It looks into the effect of the Zoo's program on animal breeding and the amount of food consumed by the animals. It also discusses the options related to budgeting which may help in a revenue increase or may lessen expenditures. With the application of variance analysis, students would be able to understand the factors affecting financial development.
Linda Bilmes
Harvard Business Review (KS1126-PDF-ENG)
April 15, 2015
Case questions answered:
- Perform a revenue and expenditure variance on the 2009 Kalamazoo Zoo budget based on the information provided in Table 1. State whether the revenue variance is favorable or unfavorable. State whether the expenditure variance is favorable or unfavorable. Use template #1 below to guide your analysis
- Using the additional operating data on Kalamazoo provided in Table 2, compute revenue quantity variance and price variance for annual ticket revenue and state whether each is favorable or unfavorable. What do we know about the zoo from doing this analysis?
- Using the data provided in Table 2, compute expenditure quantity and price variance for animal food expenditures and state whether each is favorable or unfavorable. What do we learn about the Kalamazoo Zoo from doing this analysis?
- What is the overall situation at the zoo that we see from performing these variances? Reviewing these issues and the budget, what else should Rory Lyons investigate? What information is needed to be able to perform these analyses?
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Kalamazoo Zoo Case Answers
This case solution includes an Excel file with calculations.
Perform a revenue and expenditure variance on the 2009 Kalamazoo Zoo budget based on the information provided in Table 1.
State whether the revenue variance for Kalamazoo Zoo is favorable or unfavorable. State whether the expenditure variance is favorable or unfavorable. Use template #1 below to guide your analysis
Using the additional operating data on Kalamazoo provided in Table 2, compute revenue quantity variance and price variance for annual ticket revenue and state whether each is favorable or unfavorable.
What do we know about the zoo from doing this analysis?
The Kalamazoo Zoo estimated the number of tickets sold to be 15,000 tickets. However, they actually sold 5,000 fewer tickets than expected, thus, resulting in an unfavorable variance of $40,000.
On the other hand, the zoo sold tickets at a higher price than expected ($10.00 compared to $8.00), possibly because…
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