Question 1 (25 marks) TicketGuru, Inc., is a primary ticket outlet and distribut

Question

Question 1 (25 marks) TicketGuru, Inc., is a primary ticket outlet and distribution company in North ems a majorisyofivue from primary ticketing and resale meric ket behalf of its elients. TicketGuru's major costs are royalties paid to clients, telecomice costs associated with its call centre, and commissions paid to music chains and de stores. Its business has improved steadily over the past 10 years. As usual, Rodrcik Ka managing partner of TicketGuru, Inc., received a most recent year. Guru earns a majority of its revenue from primary ticketing and resale tic y, the report summarizing the performance for the TicketGuru, Inc. Performance Report For the year ended December 31, 2017 Budget Actual Variance 135 180 45 Number of tickets sold Variable Expenses Royalties ($24,875) $84,105 $120,962 $30,000 $235,067 S108,980 $140,002 ($19,040) 545 870($15,870) Telecommunication $45,870 Commissions Total Fixed Expenses Server maintenance Total $294,852($59,785) 510,000 (9,960) $500,040 $500,040 $510,000 $735,107 Total Expenses $804,852 (S69,745) Required: a) Explain the major weaknesses of the performance report (5 marks) b) Explain clearly why all variances are unfavourable (5 marks) The

Explanation / Answer

Actual Flexible budget variance Flexible budget Volume variance Planning budget Number of tickets sold 180 180 135 Variable expense Royalties 108980 3160 F 112140 28035 U 84105 Telecommunications 140002 21281 F 161283 40321 U 120962 Commissions 45870 5870 U 40000 10000 U 30000 Total variable expense 294852 18571 F 313423 78356 U 235067 Fixed expense Server maintenance 510000 9960 U 500040 0 500040 Total fixed expense 510000 9960 U 500040 0 500040 Total expense 804852 813463 735107

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