The Perez Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $26,882 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 $12.90. The cost driver for meals was attendance, which was expected to be 1,510 individuals. 2. Postage was based on $0.66 per invitation and 3,550 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed. 3. The facility charge is $2,100 for a room that will accommodate up to 1,700 people; the charge for one to hold more than 1,700 people is $2,600. 4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity. PEREZ MANAGEMENT ASSOCIATION Public Relations Luncheon Budget April Year 2 Operating funds allocated $26,882 Expenses Variable costs Meals (1,510 x $12.90) 19,479 Postage (3,550 * 0.66) 2,343 Fixed costs Facility 2,100 Printing 1,060 Decorations 950 Speaker's gift 240 Publicity 710 Total expenses 26,882 Budget surplus (deficit) 0 Actual results for the luncheon follow. PEREZ MANAGEMENT ASSOCIATION Actual Results for Public Relations Luncheon April Year 2 Operating funds allocated $26,882 Expenses Variable costs Meals (1,730 x $13.60) 23,528 Postage (4,550 x 0.66) 3,003 Fixed costs Facility 2,600 Printing 1,060 Decorations 950 Speaker's gift 240 Publicity 710 Total expenses 32,091 Budget deficit $(5,209) 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, 4,550 invitations were mailed. 2. Attendance was 1,730 individuals. Because of higher-than-expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to $2,600 3. At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $13.6 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 $ 26,882 19,479 2,343 Allocated funds Expenses: Variable expenses Meals Postage Fixed expenses Facility Printing Decorations Speaker's gift Publicity Total expenses Surplus(deficit) 2,100 1,060 950 240 710 26,882 0 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 = $ 26,882 23,528 3,003 Allocated funds Expenses: Variable costs: Meals Postage Fixed costs: Facility Printing Decorations Speaker's gift Publicity Total expenses Surplus(deficit) 2,600 1,060 950 240 710 32,091 (5,209) $