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.
Building Your Skills Case (LO9-1, LO9-2, LO9-3] 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 Budgeted number of performances 108 Actors and directors wages Stagehands wages Ticket booth personnel and ushers wages Scenery, costumes, and props Theater hall rent Printed programs Publicity Administrative expenses Total $ 235, 440 51,840 35,640 109,080 73,440 46, 440 13,080 49,680 $ 614,640 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:

Answer 1

The Little Theatre
Flexible Budget
For the year ended December 31
	Workings:	Flexible Budget
Production	x	7
Performance	y	168
Actor's and Director's wages	($235440/108) X 168	$   3,66,240
Stagehands wages	($51840/108) X 168	$      80,640
Ticket booth and usher wages	($35640/108) X 168	$      55,440
Scenery, costumes and props	($109080/6) X 7	$   1,27,260
Theatre hall rent	($73440/108) X 168	$   1,14,240
Printed programs	($46440/108) X 168	$      72,240
Publicity	($13080/6) X 7	$      15,260
Administrative expenses	[$49680*.75] + [($49680*.15)*7/6] + ($49680*.10)*168/108]	$      53,682
Total expenses		$   8,85,002
The Little Theatre
Spending Variance
For the year ended December 31
	Actual results	Spending Variances		Flexible Budget
Production	7			7
Performance	168			168
Actor's and Director's wages	$                           3,91,300	$      25,060	U	$      3,66,240
Stagehands wages	$                              79,400	$         1,240	F	$         80,640
Ticket booth and usher wages	$                              57,400	$         1,960	U	$         55,440
Scenery, costumes and props	$                           1,31,500	$         4,240	U	$      1,27,260
Theatre hall rent	$                           1,05,900	$         8,340	F	$      1,14,240
Printed programs	$                              66,200	$         6,040	F	$         72,240
Publicity	$                              16,900	$         1,640	U	$         15,260
Administrative expenses	$                              54,700	$         1,018	U	$         53,682
Total expenses	$                           9,03,300	$      18,298	U	$      8,85,002