nces The Baird Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $22,328 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 $12.00. The cost driver for meals was attendance, which was expected to be 1.420 Individuals. 2. Postage was based on $0.48 per invitation and 3,100 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed. 3. The facility charge is $1,200 for a room that will accommodate up to 1,600 people; the charge for one to hold more than 1,600 people is $1,700. 4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity. BAIRD MANAGEMENT ASSOCIATION Public Relations Luncheon Budget April Year 21 Operating funds allocated i Expenses Variable costs Meals (1,420 x $12.00) Postage (3,100 0.48) Fixed costs Facility $22,328 17,040 1,488 1,200 Printing 970 Decorations Speaker's gift Publicity Total expenses 860 150 620 22,328 Budget surplus (deficit) $ B ook rint rences BAIRD MANAGEMENT ASSOCIATION Actual Results for Public Relations Luncheon April Year 2 Operating funds allocated Expenses Variable costs Meals (1,640 x $12.70) Postage (4,100 x 0.48) Fixed costs Facility Printing Decorations Speaker's gift. Publicity Total expenses Budget deficit $22,328 20,828 1,968 1,700 970 860 150 620 27,096 $(4,768) 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, 4,100 invitations were mailed. 2. Attendance was 1,640 individuals. Because of higher-than-expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to$1,700 3. At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $12.7 per person 4. Printing, decorations, the speaker's gift, and publicity costs were as budgeted. Required: a. 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. b. Compute flexible budget variances by comparing the flexible budget with the actual results. ces Allocated funds Expenses: Variable expenses Master Budget Flexible Budget Volume Variance $ 22,328 Meals 17,040 Postage 1,488 Fixed expenses Facility 1,200 + Printing 970 Decorations Speaker's gift 860 150 Publicity 620 Total expenses 22,328 Surplus(deficit) $ 0 Required B > Allocated funds Expenses: Variable costs: Meals Postage Fixed costs: Facility Printing Decorations Speaker's gift Publicity Total expenses Surplus(deficit) 1.e., zero varia Flexible Budget Actual Results = Flexible Variances $ 22,328 20,828 1,968 1,700 970 860 150 620 27,096 $ (4,768) < Required A Required