The Campbell Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $23,312 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 $12.20. The cost driver for meals was attendance, which was expected to be 1,440 individuals.
2. Postage was based on $0.52 per invitation and 3,200 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed.
3. The facility charge is $1,400 for a room that will accommodate up to 1,600 people; the charge for one to hold more than 1,600 people is $1,900.
4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity.

CAMPBELL MANAGEMENT ASSOCIATIONPublic Relations Luncheon BudgetApril Year 2Operating funds allocated$23,312ExpensesVariable costsMeals (1,440 $12.20)17,568Postage (3,200 0.52)1,664Fixed costsFacility1,400Printing990Decorations880Speaker's gift170Publicity640Total expenses23,312Budget surplus (deficit)$0

Actual results for the luncheon follow.

CAMPBELL MANAGEMENT ASSOCIATIONActual Results for Public Relations LuncheonApril Year 2Operating funds allocated$23,312ExpensesVariable costsMeals (1,660 $12.90)21,414Postage (4,200 0.52)2,184Fixed costsFacility1,900Printing990Decorations880Speaker's gift170Publicity640Total expenses28,178Budget deficit$(4,866)

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, 4,200 invitations were mailed.
2. Attendance was 1,660 individuals. Because of higher-than-expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to$1,900
3. At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $12.9 per person.
4. Printing, decorations, the speaker's gift, and publicity costs were as budgeted.

Required:

a.Preparea 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 actualresults.

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).)

Master Budget-Flexible Budget=Volume VarianceAllocated funds$

23,312Expenses:Variable expenses Meals17,568 Postage1,664Fixed expenses Facility1,400 Printing990 Decorations880 Speaker's gift170 Publicity640Total expenses23,312Surplus(deficit)$

0