Question

The Little Theatre is a nonprofit organization devoted to staging plays for children. The theater has a very small full-time professional administrative staff. Through a special arrangement with the actors’ union, actors and directors rehearse without pay and are paid only for actual performances.

The Little Theatre had tentatively planned to put on six different productions with a total of 108 performances. For example, one of the productions was Peter Rabbit, which had a six-week run with three performances on each weekend. The costs from the current year’s planning budget appear below.

The Little Theatre Costs from the Planning Budget For the Year Ended December 31
Budgeted number of productions		6
Budgeted number of performances		108
Actors and directors wages	$	220,320
Stagehands wages		36,720
Ticket booth personnel and ushers wages		20,520
Scenery, costumes, and props		108,240
Theater hall rent		58,320
Printed programs		31,320
Publicity		12,240
Administrative expenses		47,520
Total	$	535,200

Some of the costs vary with the number of productions, some with the number of performances, and some are fixed and depend on neither the number of productions nor the number of performances. The costs of scenery, costumes, props, and publicity vary with the number of productions. It doesn’t make any difference how many times Peter Rabbit is performed, the cost of the scenery is the same. Likewise, the cost of publicizing a play with posters and radio commercials is the same whether there are 10, 20, or 30 performances of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. The greater the number of performances, the higher the wage costs will be. Similarly, the costs of renting the hall and printing the programs will vary with the number of performances. Administrative expenses are more difficult to analyze, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions staged, and the remaining 10% depend on the number of performances.

After the beginning of the year, the board of directors of the theater authorized expanding the theater’s program to seven productions and a total of 168 performances. Not surprisingly, actual costs were considerably higher than the costs from the planning budget. (Grants from donors and ticket sales were also correspondingly higher, but are not shown here.) Data concerning the actual costs appear below:

The Little Theatre Actual Costs For the Year Ended December 31
Actual number of productions		7
Actual number of performances		168
Actors and directors wages	$	352,600
Stagehands wages		56,300
Ticket booth personnel and ushers wages		32,900
Scenery, costumes, and props		130,800
Theater hall rent		84,200
Printed programs		44,500
Publicity		15,500
Administrative expenses		53,500
Total	$	770,300

Required:

1. Prepare a flexible budget performance report for the year that shows both spending variances and activity variances

The Little Theatre Flexible Budget Performance Report For the Year Ended December 31 Actual Flexible Results Budget 77 168 168 Planning Budget Number of productions Number of performances 108 $ $ 352,600 $ $ 220,320 352,600 56,300 Actors' and directors' wages Stagehands' wages Ticket booth personnel and ushers' wages Scenery, costumes, and props Theatre hall rent Printed programs Publicity Administrative expenses Total 130,800 84.2001 44,500 15,500 53,500 770,300 342,720 57,120 31,920 126,280 90,720 48,720 14,280 36,720 20,520 108,240 58,320 31,320 12,240 47,520 535,200 $ $

Answer 1

Administrative expenses Total in planning Budget 75% fixed 15% vary with production 10% vary with performance Total in Flexible budget Flexible 47520 35640 7128 35640 fixed 8316 (7128/6)*7 7392 (4752/108)*168 51348 The Little Theatre Flexible Budget performance Report For the year Ended December 31 Spending Variance Flexible Budget Actual results Activity Variance Planning Budget Number of Productions Number of performances 168 168 108 Actor's and director's wages Stagehands wages Ticket booth personnel and usher's wages | Scenery, costumes, and props Theatre hall rent Printed programs Publicity Administrative expenses total 352600 56300 32900 130800 84200 44500 15500 53500 770300 -9880 U 820 F -980U -4672 U 6520 F 4220 F -12200 -2152 U -7344 U 342720 57120 31920 126128 90720 48720 14280 51348 762956 -122400 U -20400 U -11400 u -178880 -32400U -17400 U -2040 U -3828U -227756U 220320 36720 20520 108240 58320 31320 12240 47520 535200

Administrative expenses Total in planning Budget 75% fixed 15% vary with production 10% vary with performance Total in Flexible budget Flexible 47520 35640 7128 35640 fixed 8316 (7128/6)*7 7392 (4752/108)*168 51348 The Little Theatre Flexible Budget performance Report For the year Ended December 31 Spending Variance Flexible Budget Actual results Activity Variance Planning Budget Number of Productions Number of performances 168 168 108 Actor's and director's wages Stagehands wages Ticket booth personnel and usher's wages | Scenery, costumes, and props Theatre hall rent Printed programs Publicity Administrative expenses total 352600 56300 32900 130800 84200 44500 15500 53500 770300 -9880 U 820 F -980U -4672 U 6520 F 4220 F -12200 -2152 U -7344 U 342720 57120 31920 126128 90720 48720 14280 51348 762956 -122400 U -20400 U -11400 u -178880 -32400U -17400 U -2040 U -3828U -227756U 220320 36720 20520 108240 58320 31320 12240 47520 535200

There was an error in typing Flexible budget amount.

I have corrected and made it in bold letters, so that it can be identified easily.

Please Check the below.

The Little Theatre Flexible Budget performance Report For the year Ended December 31 JActual results Iding Var Flexible Budget kivity Varia Planning Budget Number of Productions Number of performances 168 168 108 Actor's and director's wages Stagehands wages Ticket booth personnel and usher's wages Scenery, costumes, and props Theatre hall rent Printed programs Publicity Administrative expenses 3526001-9880 UI 56300 820 F 32900 -980 UI 130800] -4520 UN 84200 6520 F 44500 4220 F 155001 - 12200 53500-2152 0 770300 - 7192 01 342720-122400 UN 571201 -20400 UI 31920 -11400 UN 126280 -180400 90720 -32400U 487201 -174000 14280 -2040 UT 51348 -382801 763108 -227908 u 220320 36720 20520 108240 58320 31320 12240 47520 535200 total