The Redmond Management Association held its annual public relations luncheon in April Year 2 Based on the previous year's results, the organization allocated $31,760 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 The meal cost per person was expected to be $13 80 The cost driver for meals was attendance, which was expected to be 1,600 individuals Postage was based on $0 84 per invitation and 4,000 invitations were expected to be mailed The cost driver for postage was number of invitations mailed The facility charge is $3,000 for a room that will accommodate up to 1,700 people the charge for one to hold more than 1,700 people is $3,500 A fixed amount was designated for printing, decorations, the speaker's gift, and publicity REDMOND MANAGEMENT ASSOCIATION Public Relations Luncheon Budget April Year 2 Operating funds allocated $ 31,760 Expenses Variable costs Meals (1,600 $13 80) 22,080 Postage (4,000 0 84) 3,360 Fixed costs Facility 3,000 Printing 1,150 Decorations 1,040 Speaker's gift 330 Publicity 800 Total expenses 31,760 Budget surplus (deficit) $ 0 Actual results for the luncheon follow REDMOND MANAGEMENT ASSOCIATION Actual Results for Public Relations Luncheon April Year 2 Operating funds allocated $ 31,760 Expenses Variable costs Meals (1,820 $14 50) 26,390 Postage (5,000 0 84) 4,200 Fixed costs Facility 3,500 Printing 1,150 Decorations 1,040 Speaker's gift 330 Publicity 800 Total expenses 37,410 Budget deficit $ (5,650 ) Reasons for the differences between the budgeted and actual data follow The president of the organization, Rodney Snow, increased the invitation list to include 1,000 former members As a result, 5,000 invitations were mailed Attendance was 1,820 individuals Because of higher than expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to$3,500 At the last minute, Ms Hubbard decided to add a dessert to the menu, which increased the meal cost to $14 5 per person Printing, decorations, the speaker's gift, and publicity costs were as budgeted Required a Prepare the 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) ) 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) )

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The Redmond Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $31,760 of

The Redmond Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $31,760 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:

The meal cost per person was expected to be $13.80. The cost driver for meals was attendance, which was expected to be 1,600 individuals.
Postage was based on $0.84 per invitation and 4,000 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed.
The facility charge is $3,000 for a room that will accommodate up to 1,700 people; the charge for one to hold more than 1,700 people is $3,500.
A fixed amount was designated for printing, decorations, the speaker's gift, and publicity.

REDMOND MANAGEMENT ASSOCIATION
Public Relations Luncheon Budget
April Year 2
Operating funds allocated	$	31,760
Expenses
Variable costs
Meals (1,600 $13.80)		22,080
Postage (4,000 0.84)		3,360
Fixed costs
Facility		3,000
Printing		1,150
Decorations		1,040
Speaker's gift		330
Publicity		800
Total expenses		31,760
Budget surplus (deficit)	$	0

Actual results for the luncheon follow.

REDMOND MANAGEMENT ASSOCIATION
Actual Results for Public Relations Luncheon
April Year 2
Operating funds allocated	$	31,760
Expenses
Variable costs
Meals (1,820 $14.50)		26,390
Postage (5,000 0.84)		4,200
Fixed costs
Facility		3,500
Printing		1,150
Decorations		1,040
Speaker's gift		330
Publicity		800
Total expenses		37,410
Budget deficit	$	(5,650	)

Reasons for the differences between the budgeted and actual data follow.

The president of the organization, Rodney Snow, increased the invitation list to include 1,000 former members. As a result, 5,000 invitations were mailed.
Attendance was 1,820 individuals. Because of higher-than-expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to$3,500
At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $14.5 per person.
Printing, decorations, the speaker's gift, and publicity costs were as budgeted.

Required:

a.Prepare the 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).)

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).)