Question

The Stuart Management Association held its annual public relations luncheon in April 2017. Based on the previous year's results, the ted $29,010 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 2017 luncheon. The budget for the luncheon was based on the following expectations. 1. The meal cost per person was expected to be $13.30. The cost driver for meals was attendance, which was expected to be 1,550 individuals 2. Postage was based on $0.74 per invitation and 3,750 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed 3. The facility charge is $2,500 for a room that will accommodate up to 1,700 people; the charge for one to hold more than 1,700 people is $3,000 4. Afixed amount was designated for printing, decorations, the speaker's gift, and publicity. STUART MANAGEMENT ASSOCINION Public Relations Luncheon Budget April 2017 Operating funds allocated $29,010 Expenses Variable costs Meals (1,550 $13.30) 20,615 Postage (3.750 0.74) 2.775 Fixed costs Tacility 2.500 Printing 1. 100 Decorations blicity Total expenses budget surplus deficit)

Answer 1

Answer to a
Major difference between Master and flexible budget is that master budget does not change due to change in activity level.However flexible budget changes due to change in activity level.
Costs	Master budget	-	Flexible budget	=	Volume Variance
Allocated funds	$          29,010		$           29,010		$              -
Expenses
Variable expenses
meals	$          20,615		$           23,541		$      -2,926	(U)
Postage	$             2,775		$              3,515		$          -740	(U)
Fixed Expenses					$              -
Facility	$             2,500		$              3,000		$          -500	(U)
Printing	$             1,100		$              1,100		$              -
Decorations	$                990		$                 990		$              -
Speakers gift	$                280		$                 280		$              -
Publicity	$                750		$                 750		$              -
Total Expenses	$          29,010		$           33,176		$      -4,166
Surplus/ (Deficit)			$            -4,166		$              -
Answer to b
Statement showing comparision between Flexible budget and Actual results
Costs	Flexible budget	-	Actual budget	=	Volume Variance
Allocated funds					$              -
Expenses					$              -
Variable expenses					$              -
meals	$          23,541		$           24,780		$      -1,239	(U)
Postage	$             3,515		$              3,515		$              -	(U)
Fixed Expenses					$              -
Facility	$             3,000		$              3,000		$              -	(U)
Printing	$             1,100		$              1,100		$              -
Decorations	$                990		$                 990		$              -
Speakers gift	$                280		$                 280		$              -
Publicity	$                750		$                 750		$              -
Total Expenses	$          33,176		$           34,415		$      -1,239
Surplus/ (Deficit)					$              -