Question

The Baird Management Association held its annual public relations luncheon in April 2017. Based on the previous year's results, the organization allocated $22,328 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 $12.00. The cost driver for meals was attendance, which was expected to be 1,420 2. Postage was based on $0.48 per invitation and 3,100 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed. 3. The facility charge is $1,200 for a room that will accommodate up to 1,600 people; the charge for one to hold more than 1,600 people is $1,700. 4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity Actual results for the luncheon follow. BAIRD Public Relations Luncheon Budget April 2817 BAIRD NANAGEMENT ASSOCIATION Actual Results for Public Relations Luncheon April 2817 Operating funds allocated Operating Funds allocated 22,328 Variable costs Meals (1,428 12.80) Postage (3,188 8.48) Fixed costs Facility Printing 17,840 1,488 Variable costs Meals (1,648 $12.78) Postage (4,189 8.48) Fixed costs Facilit)y Printing Decorations Speaker 's gift Publicity 28,828 1,968 1,200 970 1,700 978 Speaker s gift Publicit)y 15e 15e Total expenses Budget surplus (deficit) Total expenses Budget deficit 5 (4,768 Reasons for the differences between the budgeted and actual data follow 1 The president of the organization, Zachary Taylor, increased the invitation list to include 1,000 former members. As a result, 4100 invitations were malled. 2. Attendance was 1,640 individuals. Because of higher-than-expected attendance, the luncheon was moved to a larger room, thereby increasing the facility charge to$1,700 3. At the last minute, Ms. Cole decided to add a dessert to the menu, which increased the meal cost to $127 per person 4. Printing. decorations, the speaker's gift, and publicity costs were as budgeted Required: a. Prepare a fiexible budget and compute the sales and variable cost volume variances based on a comparison between the master budget and the flexible budget b. Compute fiexible budget variances by comparing the flexible budget with the actual results.

Answer 1

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