The Lancaster Chamber Orchestra is a small community orchestra that offers two distinct concert series for its patrons. Series A is devoted entirely to the performance of a classical repertoire and offers 10 concerts throughout the year, while Series B consists of six pops concerts and serves to broaden the audience base of the ensemble. Since programming needs change from concert to concert, musicians are hired on a per- service basis. (A service is either a rehearsal or a concert.) They are paid at differential average rates due to instrumental doubling requirements and also due to solo pay for woodwinds, percussion, and brass players. After the budget has been set, variances in musician costs are the result of changes in programming and rehearsal scheduling. Programming changes can cause different numbers of musicians to be needed for a particular series of rehearsals and concerts or can change the doubling requirements. Changes in rehearsal scheduling can alter needs for certain families of instruments at some rehearsals.

For example, one Series A concert usually consists of six services, but not all instruments are required at each service. Programming and rehearsal scheduling are decided by the music director, Maestro Fritz Junger, but musician cost constraints are imposed by the director of production, Candice Wrightway. Budgeted and actual musician costs for the 2010– 2011 season follow.

Required:
a. Calculate a flexible budget for the Lancaster Chamber Orchestra’s 2010– 2011 season.
b. After calculating the flexible budget, Randall Nobucs, director of finance, found a total unfavorable variance in net income of $ 53,158. Account for this unfavorable variance by calculating
(1) Revenue variances.
(2) Labor efficiency variances.
(3) Overhead efficiency and overhead spending variances.
c. Nobucs is concerned that if the orchestra faces similar problems in the next season, the accumulated deficit will cause bankruptcy. He argues with Alan Voit that a 15 percent in-crease in ticket prices would ensure a balanced budget for the 2010– 2011 season. Discuss the feasibility of this strategy.
d. In examining the income statement, CEO Peter Morris is puzzled. He believes that all of his senior staff members are superb and is not sure where to lay the blame for the orches-tra’s dismal financial performance. Discuss the areas of specialized knowledge involved in the operation. Which person should be held accountable for eachvariance?

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LANCASTER CHAMBER ORCHESTRA Musicians Bndget 2010-2011 Series A Budget Average Number of Services pr Namber of Services per Instrunent Fay Rate Masicians Musician Musicians Musician Woodwinds 10 12 56 53 52 59 10 Percussion Strings $58/hour $55 hour 28 Series B Budgel Average Number of Services per Namber o Services per Instrument Family Rate Musicians Musician AI usicia ns Musician Woodwinds 10 S58hour $55/hour 24 21 24 Strings