CASE 926 Performance Report with More Than One Cost Driver LO9-2, LO9-3, LO9-5, LO9-6 The Litte Theatre is a nonprofit organization that stages plays for children. The theater has a very small full-time professional administrative staff. Through a special arrangement with the actors' union, actors and directors rehearse without pay and are paid only for actual performances. The Little Theatre planned to put on six different productions with a total of 108 performances. For example, one of the productions was Peter Rabbit, which had a six-week run with three performances on each weekend. The costs from the current year's planning budget appear below: Some of the costs vary with the number of productions, some vary with the number of performances, and some are fixed. The costs of scenery, costumes, props, and publicity vary with the number of productions. It doesn't make any difference how many times Peter Rabbit is performed, the cost of the scenery is the same. Likewise, the cost of publicizing a play with posters and radio commercials is the same whether there are 10,20 , or 30 performances. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. Similarly, the costs of renting the hall and printing the programs vary with the number of performances. For administrative expenses, 75 percent of the budgeted costs are fixed, 15 percent depend on the number of productions staged, and the remaining 10 percent depend on the number of performances. After the beginning of the year, the theater's board of directors authorized expanding the theater's program to seven productions and a total of 168 performances. Not surprisingly, actual costs were considerably higher than the planning budget. (Grants from donors and ticket sales were also correspondingly higher but are not shown here.) Data concerning the actual costs were as follows: Required: 1. Using Exhibit 9-11 as your guide, prepare a flexible budget performance report for the year. 2. If you were on the board of directors, would you be pleased with how well costs were controlled during the year? Why, or why not? 3. The cost formulas provide figures for the average cost per production and average cost per performance. How accurate do you think these figures would be for predicting the cost of a new production or an additional performance of an existing production