Case 9-28 Performance Report with More Than One Cost Driver [LO9-4, LO9-5]

The Little Theatre is a nonprofit organization devoted to staging plays for children. The theatre 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 costs from the current years planning budget appear below. The Little Theatre had tentatively 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 Little Theatre Costs from the Planning Budget For the Year Ended December 31
Budgeted number of productions		6
Budgeted number of performances		108
Actors and directors wages	$	216,000
Stagehands wages		32,400
Ticket booth personnel and ushers wages		16,200
Scenery, costumes, and props		108,000
Theatre hall rent		54,000
Printed programs		27,000
Publicity		12,000
Administrative expenses		43,200
Total	$	508,800

Some of the costs vary with the number of productions, some with the number of performances, and some are fixed and depend on neither the number of productions nor the number of performances. The costs of scenery, costumes, props, and publicity vary with the number of productions. It doesnt 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 of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. The greater the number of performances, the higher the wage costs will be. Similarly, the costs of renting the hall and printing the programs will vary with the number of performances. Administrative expenses are more difficult to pin down, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions staged, and the remaining 10% depend on the number of performances.

After the beginning of the year, the board of directors of the theatre authorized expanding the theatres program to seven productions and a total of 168 performances. Not surprisingly, actual costs were considerably higher than the costs from the planning budget. (Grants from donors and ticket sales were also correspondingly higher, but are not shown here.) Data concerning the actual costs appear below:

The Little Theatre Actual Costs For the Year Ended December 31
Actual number of productions		7
Actual number of performances		168
Actors and directors wages	$	341,800
Stagehands wages		49,700
Ticket booth personnel and ushers wages		25,900
Scenery, costumes, and props		130,600
Theatre hall rent		78,000
Printed programs		38,300
Publicity		15,100
Administrative expenses		47,500
Total	$	726,900

Required:

1.	Complete the flexible budget for The Little Theatre based on the actual activity of the year.

The Little Theatre
Flexible Budget
For the Year Ended December 31
Actors and directors wages
Stagehands wages
Ticket booth personnel and ushers wages
Scenery, costumes, and props
Theatre hall rent
Printed programs
Publicity
Administrative expenses
Total

2.

Complete the flexible budget performance report for the year that shows both activity variances and spending variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

The Little Theatre
Flexible Budget Performance Report
For the Year Ended December 31
	Actual Results	Spending Variances		Flexible Budget	Activity Variances		Planning Budget
Actors' and directors' wages	$341,800						$216,000
Stagehands' wages	49,700						32,400
Ticket booth personnel and ushers' wages	25,900						16,200
Scenery, costumes, and props	130,600						108,000
Theatre hall rent	78,000						54,000
Printed programs	38,300						27,000
Publicity	15,100						12,000
Administrative expenses	47,500						43,200
Total