Check my work The Redmond Management Association held its annual public relations luncheon in April year 2 Based on the previous year's results, the organization allocated $25,290 of its operating budget to cover the cost of the luncheon To ensure that costs would be appropriately controlled, Molly Hubbard, the treasurer, prepared the following budget for the year 2 luncheon The budget for the luncheon was based on the following expectations 1. The meal cost per person was expected to be $1450 The cost driver for meals was attendance, which was expected to be 1.400 individuals 2. Postage was based on $0.49 per invitation and 3,000 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed 3. The facility charge is $1,000 for a room that will accommodate up to 1.600 people, the charge for one to hold more than 1,600 people is $1,500. 4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity REDMOND MANAGEMENT ASSOCIATION Public Relations Luncheon Budget April year Operating funds allocated $25,29 Expenses Variable costs Meals (1,400 $14.50) 20. Joe Postage (3,000 $0.49) Fixed costs Facility 1. e Printing Decorations Speaker's sit Publicity REDMOND MANAGEMENT ASSOCIATION Public Relations Luncheon Budget April year 2 Operating funds allocated $25,290 Expenses Variable costs Meals (1,400 x $14.50) 20,300 Postage (3,000 x $0.49) 1,470 Fixed costs Facility 1,000 Printing 950 Decorations 840 Speaker's gift 130 Publicity 600 Total expenses 25,290 Budget surplus (deficit) Actual results for the luncheon follow. REDMOND MANAGEMENT ASSOCIATION Actual Results for Public Relations Luncheon April year 2 Operating funds allocated $25,290 Expenses Variable costs Meals (1,620 x $15.50) 25, 110 Postage (4,000 x $0.49) 1,960 Fixed costs 1 Actual results for the luncheon follow $25,290 REDOND MANAGEMENT ASSOCIATION Actual Results for Public Relations Luncheon April year 2 Operating funds allocated Expenses Variable costs Meals (1,620 x $15.50) 25, 110 Postage (4,080 x $0.49) 1,960 Fixed costs Facility 1,500 Printing 950 Decorations Speaker's gift Publicity Total expenses 31,090 Budget deficit $(5,800) Reasons for the differences between the budgeted and actual data follow. 1. The president of the organization, Rodney Snow, increased the invitation list to include 1.000 former members. As a result 4,000 invitations were mailed. 2. Attendance was 1,620 individuals. Because of higher than expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to $1,500. 3. At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $15.50 per person 4. Printing, decorations, the speaker's gift, and publicity costs were as budgeted. Required A Required B Prepare a flexible budget and compute the sales and variable cost volume variances based on a comparison between the master budget and the flexible budget. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (1.e., zero variance).) Flexible Budget - Volume Variance Master Budget - $ 25 290 Allocated funds Expenses Variable expenses Meals 20,300 1.470 1 000 950 Postage Fixed expenses Facility Printing Decorations Speaker's gift Publicity Total expenses Surplus(deficit) 840 130 600 25 290 Required B > Required A Required B Compute flexible budget variances by comparing the flexible budget with the actual results. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).). Flexible Budget - Flexible Variances Actual Results - 25 290 Allocated funds Expenses: Variable costs Meals 25.110 1.960 Postage Fixed costs Facility Printing Decorations Speaker's gift Publicity Total expenses Surplus(deficit) 1,500 950 840 130 600 31.090 (5.800)
