Problem 8-19A (Algo) Analyzing not-for-profit entity variances LO 8-1, 8-2, 8-3 10 points The Munoz Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $26,360 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. eBook The budget for the luncheon was based on the following expectations: Print References 1. The meal cost per person was expected to be $12.80. The cost driver for meals was attendance, which was expected to be 1,500 individuals. 2. Postage was based on $0.64 per invitation and 3,500 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed. 3. The facility charge is $2,000 for a room that will accommodate up to 1,700 people; the charge for one to hold more than 1,700 people is $2,500. 4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity. MUNOZ MANAGEMENT ASSOCIATION Public Relations Luncheon Budget April Year 2 Operating funds allocated $26,360 Expenses Variable costs Meals (1,500 * $12.80) 19,200 Postage (3,500 x 0.64) 2,240 Fixed costs Facility 2,000 Printing 1,050 Decorations 940 Speaker's gift 230 Publicity 700 Total expenses 26,360 Budget surplus (deficit) Actual results for the luncheon follow. MUNOZ MANAGEMENT ASSOCIATION Actual Results for Public Relations Luncheon April Year 2 Operating funds allocated $26,360 Expenses Variable costs Meals (1,720 x $13.50) 23,220 Postage (4,500 * 0.64) 2,880 Fixed costs Facility 2,500 Printing 1,050 Decorations 940 Speaker's gift 230 Publicity 700 Total expenses 31,520 Budget deficit $(5,160) 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, 4,500 invitations were mailed. 2. Attendance was 1,720 individuals. Because of higher-than-expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to$2,500 3. At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $13.5 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. Complete this question by entering your answers in the tabs below. 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 i.e., zero variance).) - Flexible Budget = Volume Variance Master Budget $ 26,360 19,200 2,240 Allocated funds Expenses: Variable expenses Meals Postage Fixed expenses Facility Printing Decorations Speaker's gift Publicity Total expenses Surplus(deficit) 2,000 1,050 940 230 700 26,360 0 $ Complete this question by entering your answers in the tabs below. 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 $ 26,360 Allocated funds Expenses: Variable costs: Meals 23,220 2,880 Postage Fixed costs: Facility Printing Decorations Speaker's gift Publicity Total expenses Surplus(deficit) 2,500 1,050 940 230 700 31,520 (5,160) $
