The Franklin Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $24,818 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 $12.50. The cost driver for meals was attendance, which was expected to be 1,470 individuals. 2. Postage was based on $0.58 per invitation and 3,350 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed. 3. The facility charge is $1,700 for a room that will accommodate up to 1,600 people; the charge for one to hold more than 1,600 people is $2,200. 4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity. FRANKLIN MANAGEMENT ASSOCIATION Public Relations Luncheon Budget April Year 2 Operating funds allocated $24,818 Expenses Variable costs Meals (1,470 x $12.50) 18,375 Postage (3,350 x 0.58) 1,943 Fixed costs Facility 1,700 Printing 1,020 Decorations 910 Speaker's gift 200 Publicity 670 Total expenses 24,818 Budget surplus (deficit) $ Actual results for the luncheon follow. FRANKLIN MANAGEMENT ASSOCIATION Actual Results for Public Relations Luncheon April Year 2 Operating funds allocated $24,818 Expenses Variable costs Meals (1,690 x $13.20) 22,308 Postage (4,350 x 0.58) 2,523 Fixed costs Facility 2,200 Printing 1,020 Decorations 910 Speaker's gift 200 Publicity 670 Total expenses 29,831 Budget deficit $(5,013) 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, 4,350 invitations were mailed. 2. Attendance was 1,690 individuals. Because of higher-than-expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to $2,200 3. At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $13.2 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 24,818 18,375 1,943 Allocated funds Expenses: Variable expenses Meals Postage Fixed expenses Facility Printing Decorations Speaker's gift Publicity Total expenses Surplus(deficit) 1,700 1,020 910 200 670 24,818 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 $ 24,818 22,308 2,523 Allocated funds Expenses: Variable costs: Meals Postage Fixed costs: Facility Printing Decorations Speaker's gift Publicity Total expenses Surplus(deficit) 2,200 1,020 910 200 670 29,831 (5,013) $