The Little Theatre is a nonprofit organization devoted to staging plays for children. The theater has a very small full-time professional administrative staff. Through a special arrangement with the actors union, actors and directors rehearse without pay and are paid only for actual performances.

The Little Theatre had tentatively planned to put on six different productions with a total of 108 performances. For example, one of the productions was Peter Rabbit, which had a six-week run with three performances on each weekend. The costs from the current years planning budget appear below.

The Little Theatre Costs from the Planning Budget For the Year Ended December 31
Budgeted number of productions	6
Budgeted number of performances	108
Actors and directors wages	$ 244,080
Stagehands wages	60,480
Ticket booth personnel and ushers wages	44,280
Scenery, costumes, and props	109,560
Theater hall rent	82,080
Printed programs	55,080
Publicity	13,560
Administrative expenses	44,280
Total	$ 653,400

Some of the costs vary with the number of productions, some with the number of performances, and some are fixed and depend on neither the number of productions nor the number of performances. The costs of scenery, costumes, props, and publicity vary with the number of productions. It doesnt make any difference how many times Peter Rabbit is performed, the cost of the scenery is the same. Likewise, the cost of publicizing a play with posters and radio commercials is the same whether there are 10, 20, or 30 performances of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. The greater the number of performances, the higher the wage costs will be. Similarly, the costs of renting the hall and printing the programs will vary with the number of performances. Administrative expenses are more difficult to analyze, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions staged, and the remaining 10% depend on the number of performances.

After the beginning of the year, the board of directors of the theater authorized expanding the theaters program to seven productions and a total of 168 performances. Not surprisingly, actual costs were considerably higher than the costs from the planning budget. (Grants from donors and ticket sales were also correspondingly higher, but are not shown here.) Data concerning the actual costs appear below:

The Little Theatre Actual Costs For the Year Ended December 31
Actual number of productions	7
Actual number of performances	168
Actors and directors wages	$ 413,700
Stagehands wages	92,600
Ticket booth personnel and ushers wages	71,400
Scenery, costumes, and props	131,900
Theater hall rent	118,300
Printed programs	78,600
Publicity	17,700
Administrative expenses	48,800
Total	$ 973,000

Required:

1. Prepare a flexible budget for The Little Theatre based on the actual activity of the year.

2. Prepare a report for the year that shows the spending variances for all expense items.

1.]

Prepare a flexible budget for The Little Theatre based on the actual activity of the year.

The Little Theatre
Flexible Budget
For the Year Ended December 31
Actual number of productions
Actual number of performances
Actors' and directors' wages
Stagehands' wages
Ticket booth personnel and ushers' wages
Scenery, costumes, and props
Theater hall rent
Printed programs
Publicity
Administrative expenses
Total expense

2.

Prepare a report for the year that shows the spending variances for all expense items. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

The Little Theatre

Spending Variances

For the Year Ended December 31

Actual Results

Spending Variances

Flexible Budget

Number of productions

7

Number of performances

168

Actors' and directors' wages

$413,700

Stagehands' wages

92,600

Ticket booth personnel and ushers' wages

71,400

Scenery, costumes, and props

131,900

Theater hall rent

118,300

Printed programs

78,600

Publicity

17,700

Administrative expenses

Total Expense

$973,000