Question

2. Hallmark is a charity supported by donations that provides free meals to the homeless. The budget for August was based on 3,000 meals. The director has provided the following cost data to use in the budget: groceries, $3.85 per meal; kitchen operations, $4,600 per month plus $1.15 per meal; administrative expenses, $3,800 per month plus $0.85 per meal; and fundraising expenses, S1,600 per month. The director has also provided the statement of actual expenses for the month: Hallmark Statement of Expenses For the month ended August 31 Actual meals 2,900 meals Groceries Kitchen operations Administrative expenses Fundraising expenses Total expense $10,735 8,155 6,305 1,620 $26,815 Required: Prepare a flexible budget performance report showing both the activity variances and the spending variances for each of the expenses and for total expenses for August. Label each variance as favorable (F) or unfavorable (U)

Answer 1

Flexible budget performance report :

	Actual results	Spending variance	Flexible budget	Activity variance	Static budget
Meals	2900		2900		3000
Groceries	10735	430 F	11165	385 F	11550
Kitchen operations	8155	220 U	7935	115 F	8050
Administrative expense	6305	40 U	6265	85 F	6350
Fundraising expenses	1620	20 U	1600	None	1600
Total expense	26815	150 F	26965	585 F	27550