QUESTIONS Of course, there's always the possibility that there's no significant budget shortfall and that from the outset the event was simply planned to have poorer quality goods and services than in previous years. In that case, Harmon would bear some responsibility, but the bulk of the responsibility for low quality would be borne by Lisa Stevens, director of the London conference. In the end, you have no reason to suspect foul play--this particular mystery isn't likely to involve fraud-but you haven't ruled out negligence You keep all of these possibilities in mind as you begin your analysis HARD DATA 1. What is the static budget variance (that is the difference between the original budget and actual results) for the dinner? 2 Break down the state budget variance into volume variance and a flexible budet varance for the dinner What do the varices tell you? 3. Break down the flexible budget variance into price and efficiency variances. What do these variances tell you 4. Break down the price variance into a charge variance and an exchange variance. What do these variances tell you? Note that the charge variance is based solely on the difference between the budgeted price and actual price (based on the currency a nd in the organization's budget. The exchange variance is based solely on the difference between budgeted exchange rate and the exchange rate actually used in paying the invoice S. Based on your calculationswhat is the primary source of the problems with the dinner? Who appears to be mest directly responsible for the dinner failure? Assuming that the problem behind the dinner is the general cause of the EAPCS challenges this year, what recommendations would you make to avoid these problems in the future? As you look through the responses to your emailed requests for information, you recognize that much of the cost data are incomplete-many expenses haven't yet been paid from EAPC accounts. You determine that the best place to start your analysis is with the disastrous welcome dinner since that bill has already been paid. Hopefully the dinner information will list you find out what went wrong. The data you have to work with at least for n ame as follows Actual attendees 1.234 Expected attendees: 1.220 Actual cost per dinner: 58 Budgeted cost per dinner: 660 (The budget was set at the beginning of December 2014.) EPILOGUE Dinner costs in British pounds) were incurred on May 19, the day of the event. Dinner ce were invoiced and paid in usos) on May 21 from EAP accounts. Daily midpoint exchange rate information are listed in Table 1. Table 1. Daily Midpoint Exchange Rates Date Cost of 1, in euros December 1, 2014 125789 December 31, 2014 128251 May 19, 2015 138754 May 21, 2015 140346 It's June 2016, and work is going well. In May, you had helped pull off a tremendous and curo-based) success at the EAPC Annual Conference in Vilnius, Lithuania, and you were recently promoted Things have slowed down bietly in the lui between the European conference in Vilnius and the upcoming regional conferences, which will take place in various places across Europe in August. As you eat your lunch, you mull over the possibility of taking the rest of the day off Then you receive a fronte phone call Maria Duval an EAPC volunteet, introduces herself quickly and then explains the situation "I'm overcing the Northwest region's conference, and we decided to have it in London. Why did we have to choose London? Wie planned all the budgets meticulously we checked and re-checked the prices, the invite lists, everything and now this news breaks. I don't want to see another London disaster: Shirley Brishe told me you have some well-camed experience with exchange rates, and that last year's London conference failed much more gracefully than it might have ocherwise thanks to you. Could you help us here in the Northwest You called the restaurant, and the manager confirmed that menu price changes take effect only once a year, in September IMA EDUCATIONAL CASE JOURNAL 4 VOL. NO ART DECEMBER 2016 QUESTIONS Of course, there's always the possibility that there's me significant budget shortfall and that from the outset the event was simply planned to have poter quality goods and services than in previous years. In that case, Harmon would bear some responsibility, but the bulk of the responsibility for low quality would be borne by Lisa Stevens, director of the London conference. In the end, you have no reason to suspect foul pluy-this particularmystery isa't likely to involve fraud-but you haven't ruled out negligence. You keep all of these possibilities in mind as you begin your analysis HARD DATA 1. What is the b e nce that is the difference between the c h ance for the dinner? 2 Break down the watched arance into volume warance and a flexible budget variance for the dinner What do these tell you 2 Break down the flexible budget variance into price and efficiency wariances. What do these variances tell you? & Break down the price variance into a charge variance and an exchange variance. What do these variances tell you? Note that the charge variance is based solely on the difference between the budgeted price and actual price (based on the currency rate used in the organization' budget). The exchange variance is based solely on the difference between budgeted exchange rate and the exchange rate actually used in paying the invoice Based on your calculations, what is the primary source of the problems with the dinner? Who appears to be most directly responsible for the dinner failure Assuming that the problem behind the dinner is the general cause of the EAPC) challenges this year, what recommendations would you make to avoid these problems in the future! As you look through the responses to your emailed requests for information, you recognize that much of the cost data are incomplete-many expenses haven't yet been paid from EAPC accounts. You determine that the best place to start your analysis is with the disastrous welcome dinner. since that bill has already been paid. Hopefully the dinner information will help you find out what went wrong The data you have to work with, at least for now, are as follows Actual attendees 1.234 EPILOGUE Expected attendees: 1,220 Actual cost per dinner: 258 Budgeted cost per dinner: 660 (The budger was set at the beginning of December 2014.) Dinner costs in British pounds) were incurred on May 19, the day of the event. Dinner costs were invoiced and paid (in euros) on May 21 from EAPC accounts Daily midpoint exchange rate information are listed in Table 1. Table 1. Daily Midpoint Exchange Rates Cast of El, in euros December 2011 December 31, 2014 1201 May 2015 128.54 May 21, 2015 140346 It's June 2016, and work is going well. In May, you had helped pull off a tremendous and euro-based) success at the EAPC Annual Conference in Vilnius, Lithuania, and you were recently promoted Things have slowed down briefly in the lul beween the European conference in Vilnius and the upcoming regional conferences, which will take place in various places across Europe in August. As you eat your lunch, you mull over the possibility of taking the rest of the day off Then you receive a frantie phone call Muria Duval an EAPC volunteer, introduces herself quickly and then explains the situation T'm overseeing the Northwest region's conference, and we decided to have it in London. Why did we have to choose London? Wie planned all the budgets meticulously we checked and re-checked the prices, the invite lists, everything and now this news breaks. I don't want to see another London disaster Slide Brisbe told me you have some welcame experience with exchange rates, and that last year's London conference failed much more gracefully than it might have otherwise thanks to you. Could you help us here in the Northwest You called the restaurant, and the manager confirmed that menu price changes take effect only once a year, in September IMA EDUCATIONAL CASE JOURNAL 6 VOL 9 NO ART 1 DECEMBER 2016