The Little Theatre is a nonprofit organization devoted to staging plays for children. The theater has a very small fulltime 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 performances. For example, one of the productions was Peter Rabbit, which had a sixweek 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

Budgeted number of productions

Budgeted 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 $

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 or 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 of the budgeted costs are fixed, depend on the number of productions staged, and the remaining 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 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

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 $

Required:

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

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