The Gibson Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $25,328 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 $12.60. The cost driver for meals was attendance, which was expected to be 1,480 individuals.
2. Postage was based on $0.60 per invitation and 3,400 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed.
3. The facility charge is $1,800 for a room that will accommodate up to 1,600 people; the charge for one to hold more than 1,600 people is $2,300.
4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity.

GIBSON MANAGEMENT ASSOCIATIONPublic

Relations Luncheon Budget

April Year 2

Operating funds allocated $25,328

Expenses

Variable costs

Meals (1,480 $12.60) ------ 18,648

Postage (3,400 0.60) ------2,040

Fixed costs

Facility --1,800

Printing------ 1,030

Decorations ------- 920

Speaker's gift------ 210

Publicity------- 680

Total expenses-------- 25,328

Budget surplus (deficit) $0

Actual results for the luncheon follow.

GIBSON MANAGEMENT ASSOCIATION

Actual Results for Public Relations Luncheon

April Year 2

Operating funds allocated $25,328

ExpensesVariable costs

Meals (1,700 $13.30)----- 22,610

Postage (4,400 0.60) -------2,640

Fixed costs

Facility---- 2,300

Printing ------- 1,030

Decorations------ 920

Speaker's gift----- 210

Publicity------ 680

Total expenses -----30,390

Budget deficit$ ------- (5,062)

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, 4,400 invitations were mailed.
2. Attendance was 1,700 individuals. Because of higher-than-expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to$2,300
3. At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $13.3 per person.
4. Printing, decorations, the speaker's gift, and publicity costs were as budgeted.

Required:

a.Prepare 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.

Complete question by entering your answers in the tabs below.

Prepare 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).)

Required A: