Hel KM Flexible Budgeting Case [LO9-1, LO9-2, LO9-3] Theodore's Theatre is a nonprofit organization devoted to staging plays for children. The theater has a very small full-time professional administrative staff. Through a special arrangement with the actors' unlon, actors and directors rehearse without pay and are paid only for actual performances. Theodore's Theatre had tentatively planned to put on six different productions with a total of 50 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. Theodore's Theatre Costs from the Planning Budget For the Year Ended December 31 Budgeted number of produetions Budgeted number of performances 6 50 Actors and directors wages Stagehands wages Ticket booth personnel and ushers wages Scenery, cost umes, and props Theater hall rent Printed programs Publicity Adminiatrative expenses $150,000 25,000 16,000 54,000 40,000 13,500 17,400 48,000 $ 363,900 Total 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 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 of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers very with the number of performances. The greater the number of performancos, the higher the wage costs wlll be. Similarly, the costs of renting the hall and printing the programs will vary with the number of porformances. Administrative expenses are more difficult to pin down, but the best estimate is that approximately 70 % of the budgeted costs are fixed, 20 % depend on the number of productions staged, and the remaining 10 % depend on the number of performances. 1 of 3 Next Eroy errormanc After the beginning of the year, the board of directors of the theater authorized expanding the theater's program to five productions and a total of 54 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: Theodore's Theatre Actual Costs For the Year Ended December 31 Actual number of productions Actual number of performances 5 54 Actors and directors wages Stagehands wages Ticket booth personnel and ushers wages Scenery, costumes, and props Theater hall rent Printed progr ams Publicity Administrative expenses $156,000 26,600 17,500 50,300 44,600 13,950 16,400 46,450 $ 371,800 Total Required: 1. Prepare a flexible budget for Theodore's Theatre based on the actual activity of the year. 2. Prepare a report for the year that shows the spending variances for all expense items. Complete this question by entering your answers in the tabs below. Next> Prey 1 of Required 1 Required 2 Prepare a flexible budget for Theodore's Theatre based on the actual activity of the year, Theodore's Theatre Flexible Budget For the Year Ended December 31 Actual number of productions Actual number of performances Actors and directors' wages Stagehands' wages Ticket booth personnel and ushers' wages Scenery, costumes, and props Theater hall rent Printed programs Publicity Administrative expenses Total expense Required 2 Required Required 1 Prepare a report for the year that shows the spending variances for all expense items. (Indicate the effect of each varlance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero varlance). Input all amounts as positive values.) Theodore's Theatre Spending Variances For the Year Ended December 31 Actual Results Flexible Budget Spending Variances Number of productions 5 Number of performances 54 Actors' and directors' wages 156,000 Stagehands' wages 26,600 Ticket booth personnel and ushers' wages 17,500 Scenery, costumes, and props 50,300 Theater hall rent 44,600 Printed programs 13,950 Publicity 16,400 Administrative expenses 46,450 $ 371,800 Total expense