Read the scenario in the textbook and complete the activity below. Use Excel-showing all work and formulasto complete the following: Prepare a flexible budget. . Compute the sales volume variance and the variable cost volume variances based on a comparison between the master budget and the flexible budget. . Compute flexible budget variances by comparing the flexible budget with the actual results. Summarize the results of the sales volume and variable cost volume variances computations based on the comparison between the master budget and the flexible budget Summarize the results of the flexible budget variances computations based on the comparison between the flexible budget and the actual results. Justify the favorable or unfavorable budget variances. . Since this is a not-for-profit organization, address why anyone should be concerned with meeting the budget. Make recommendations for what can be done differently to stay on budget for future luncheons. Provide specific examples to support your recommendations. CHECK FIGURE b. Variance of surplus: $1,620 U Problem 8-19A Analyzing not-for-profit entity variances 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 $ 14.50. 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 Page 379 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 $25,290 20,300 1,470 April Year 2 Operating funds allocated Expenses Variable costs Meals (1,400 * $14.50) Postage (3,000 $0.49) Fixed costs Facility Printing Decorations Speaker's gift Publicity Total expenses Budget surplus (deficit) 1,000 950 840 130 600 25,290 $ 0 Actual results for the luncheon follow. REDMOND MANAGEMENT ASSOCIATION Actual Results for Public Relations Luncheon $25,290 April Year 2 Operating funds allocated Expenses Variable costs Meals (1,620 * $15.50) Postage (4,000 $0.49) 25,110 1,960 Fixed costs 1,500 950 840 Facility Printing Decorations Speaker's gift Publicity Total expenses Budget deficit 130 600 31,090 $ (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
