Use Excelshowing all work and formulasto complete the following:

oPrepare a flexible budget.

oCompute the sales volume variance and the variable cost volume variances based on a comparison between the master budget and the flexible budget.

oCompute flexible budget variances by comparing the flexible budget with the actual results.

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Summarize the results of the sales volume and variable cost volume variances computations based on the comparison between the master budget and the flexible budget.

Summarize the results of the flexible budget variances computations based on the comparison between the flexible budget and the actual results.

Justify the favorable or unfavorable budget variances.

Since this is a not-for-profit organization, address why anyone should be concerned with meeting the budget.

Make recommendations for what can be done differently to stay on budget for future luncheons. Provide specific examples to support your recommendations.

Here are the numbers that were given:

Redmond Management Association

Public Relations Luncheon Budget

April Year 2

Operating fund allocated $ 25,290

Expenses

Variable costs

Meals (1,400*$14.50) 20,300

Postage (3,000*$0.49) 1470

Fixed costs

Facility 1,000

Printing 950

Decorations 840

Speaker's gift 130

Publicity 600

Total expenses 25,290

Budget surplus (deficit) $ 0

Redmond Management Association

Actual Results for Public Relations Luncheon

April Year 2

Operating fund allocated $ 25,290

Expenses

Variable costs

Meals (1,620*$15.50) 25,110

Postage (4,000*$0.49) 1960

Fixed costs

Facility 1,500

Printing 950

Decorations 840

Speaker's gift 130

Publicity 600

Total expenses 31,090

Budget surplus (deficit) $ -5,800

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

1.The president of the organization, Rodney snow, increases the invitation list to include 1,000 former members. As a result, 4,000 invitations were mailed.

2.Attendance was 1,620 individuals. Because of higher-than- expected attendance, the luncheon was moved to a larger room, thereby increasing the facility to $1,500.

3.At the last minute, Ms. Hubbard decided to add a dessert to the menu, which increased the meal cost to $15.50 per person.

4.Printing, decoration, 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 then flexible budget with results.

c.Mr. Snow was extremely upset with the budget deficit. He immediately called Ms. Hubbard to complain about the budget variance for the meal cost. He told Ms. Hubbard that the added dessert caused the meal cost to be $4,810 ($25,110-$20,300) over budget. He added, "I could expect a couple hundred dollars one way or the other, but several thousand is totally unacceptable. At the next meeting of the budget committee, I want you to explain what happened." Assume that you are Ms. Hubbard. What would you tell the members of the budget committee?

d.Since this is a not-for-profit organization, why should anyone be concerned with meeting the budget?