The Thornton Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $29,552 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 $13.40. The cost driver for meals was attendance, which was expected to be 1,560 individuals.
2. Postage was based on $0.76 per invitation and 3,800 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed.
3. The facility charge is $2,600 for a room that will accommodate up to 1,700 people; the charge for one to hold more than 1,700 people is $3,100.
4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity.

THORNTON MANAGEMENT ASSOCIATIONPublic Relations Luncheon BudgetApril Year 2Operating funds allocated$29,552ExpensesVariable costsMeals (1,560 $13.40)20,904Postage (3,800 0.76)2,888Fixed costsFacility2,600Printing1,110Decorations1,000Speaker's gift290Publicity760Total expenses29,552Budget surplus (deficit)$0

Actual results for the luncheon follow.

THORNTON MANAGEMENT ASSOCIATIONActual Results for Public Relations LuncheonApril Year 2Operating funds allocated$29,552ExpensesVariable costsMeals (1,780 $14.10)25,098Postage (4,800 0.76)3,648Fixed costsFacility3,100Printing1,110Decorations1,000Speaker's gift290Publicity760Total expenses35,006Budget deficit$(5,454)

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, 4,800 invitations were mailed.
2. Attendance was 1,780 individuals. Because of higher-than-expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to$3,100
3. At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $14.1 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 actualresults.

Required A Required B Required B Compute flexible budget variances by comparing the flexible budget with the actual results. (Indicate the effect of each 20 variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (1.e., zero variance).) points Flexible Budget Actual Results - Flexible Variances Allocated funds $ 29.552 eBook Expenses: Variable costs Print Meals 25,098 References Postage 3,648 Fixed costs: Facility 3,100 Printing 1,110 Decorations 1,000 Speaker's gift 290 Publicity 760 Total expenses 35,006 Surplus(deficit) $ (5,454) Required A Prev. 1 of 1 Next Mc Graw Hill docation O