Question

The Rooney Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $27,938 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 Year 2 luncheon. The budget for the luncheon was based on the following expectations: 1. The meal cost per person was expected to be $13.10. The cost driver for meals was attendance, which was expected to be 1,530 individuals. 2. Postage was based on $0.70 per invitation and 3,650 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed. 3. The facility charge is $2,300 for a room that will accommodate up to 1,700 people; the charge for one to hold more than 1,700 people is $2,800. 4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity.

Answer 1

Volume Variance Master Budget - Flexible Budget $ 27,938 $ 27,938 $ $ $ 20,043 2,555 $ $ 22,925 3,255 $ $ Requirement A | Flexible Budget Particulars Allocated Funds Expenses : Variable Expenses - Meals - Postage Fixed Expenses - Facility - Printing - Decorations - Speakers' Gift - Publicity Total Expenses 2,882 Unfavorable 700 Unfavorable $ 2,300 1,080 970 260 730 27,938 $ $ $ $ 2,800 1,080 970 260 730 32,020 $ $ $ $ 500 Unfavorable None None None None 4,082 $ $ Surplus/ (Deficit) $ $ $ (4,082) $ (4,082) Flexible Variances $ $ $ $ $ Requirement B | Flexible Budget Variances Particulars Flexible Budget - Actual Results = Allocated Funds $ 27,938 $ 27,938 Expenses : Variable Expenses - Meals $ 22,925 $ 24,150 - Postage $ 3,255 $ 3,255 Fixed Expenses - Facility $ 2,800 $ 2,800 - Printing $ 1,080 $ 1,080 - Decorations $ 970 $ 970 - Speakers' Gift $ 260 $ 260 - Publicity $ 730 $ 730 Total Expenses $ 32,020 $ 33,245 1,225 Unfavorable None $ $ $ $ $ $ None None None None None 1,225 Unfavorable Surplus/ (Deficit) $ (4,082) $ (5,307) $ 1,225 Unfavorable