The Solomon Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results. the organization allocated $28.472 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 $13.20. The cost driver for meals was attendance, which was expected to be 1.540 Individuals. 2. Postage was based on $0.72 per invitation and 3,700 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed. 3. The facility charge is $2,400 for a room that will accommodate up to 1,700 people; the charge for one to hold more than 1,700 people is $2,900. 4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity. SOLOMON MANAGEMENT ASSOCIATION Public Relations Luncheon Budget April Year 2 Operating funds allocated Expenses Variable costs Meals (1,540 x $13.20) Postage (3,700 x 0.72) Fixed costs Facility Printing Decorations Speaker's gift Publicity Total expenses Budget surplus (deficit) $28,472 20,328 2,664 2,400 1,090 980 270 740 28,472 0 Actual results for the luncheon follow. SOLOMON MANAGEMENT ASSOCIATION Actual Results for Public Relations Luncheon - April Year 2 Operating funds allocated Expenses Variable costs Meals (1,760 x $13.90) Postage (4,700 0.72) Fixed costs Facility Printing Decorations Speaker's gift Publicity Total expenses Budget deficit $28,472 24,464 3,384 2,900 1,090 980 270 740 33,828 $(5,356) 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, 4,700 invitations were mailed. 2. Attendance was 1,760 individuals. Because of higher-than-expected attendance, the luncheon was moved to a larger room, thereby Increasing the facility charge to$2,900 3. At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $13.9 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).) Master Budget Flexible Budget Allocated funds $ 28,472 Expenses Variable expenses Meals 20,328 Postage 2,664 Fixed expenses Facility 2,400 Printing 1,090 Decorations 980 Speaker's gift 270 Publicity 740 Total expenses 28,472 Surplus(deficit) $ 0 Volume Variance Required A Required B >