Problem 8-19A Analyzing not-for-profit entity variances LO 8-1, 8-2, 8-3 The Wes

Question

Problem 8-19A Analyzing not-for-profit entity variances LO 8-1, 8-2, 8-3 The Westwood Management Association held its annual public relations luncheon in April 2013. Based orn the previous year's resuts, the organization allocated $22,32Bof its operating budget to cover the cost of the luncheon. To ensure that costs would be appropriately controlled, Andrea Cole, the treasurer, prepared the following budget for the 2013 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 2. Postage was based on S0.48 per invitation and 3,100 invitations were expected to be mailed. The cost 3. The faclity charge is $1,200 for a room that will accommodate up to 1,600 people; the charge for one to 4. A fixed amount was designated for printing, decorations, the speaker's gift, and publicity. was expected to be 1,420 individuals. driver for postage was number of invitations mailed. hold more than 1,600 people is $1,700 Public Relations Luncheon Budget April 2013 Operating funds allocated $22,328 Vaniable costs Meals (1,420 x$12.00 Postage (3,100x 0.48) Fixed costs Facility Prining 17,040 1,488 1,200 970 860 150 620 Speaker's gift Publicity Total expenses 22,328 Budget surplus (deficit)

Explanation / Answer

FLEXIBLE BUDGET:

____________________________________________________________________________________________

                                                                  MASTER BUDGER     -         FLEXIBLE BUDGER = VOLUME VARIANCE

Allocated funds                                            $ 22,328

Expenses :

Meals   (1420 x 12.00) &(1640 x 12.00)         17,040                                        19,680              =      2,560    (U)

Postage (3100 x 0.48) & (4100 x0.48)             1,488                                           1,968             =         480    (U)

Fixed cost :

Facility                                                             1,200                                            1,700            =         500    (U)

Printing                                                               970                                               970                        --    None

Decoration                                                          860                                               860                       --     None

Speaker gift                                                        150                                               150                       --     None

Publicity                                                              620                                               620                       =     None   

Budget surplus/deficit                                           0                                              -(3,540)                         3,540  

FLEXIBLE BUDGET VARIANCE WITH ACTUAL BUDGET:

_____________________________________________________________________________________

                                                     FLEXIBLE BUDGET    -      ACTUAL BUDGET = FLEXIBEL VARIANCE

Allocated funds                                                                              $22,328

Expenses:

Variable cost

Meals                                                 $19,680                                20,828                                1,148 (U)

Postage                                                  1,968                                 1,968                                 none

Fixed Cost :

Facility                                                    1,700                                  1,700                                  none

Printing                                                      970                                     970                                  none

Decoration                                                 860                                     860                                  none

Speakers gift                                             150                                      150                                 none

Publicity                                                     620                                      620                                none     

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