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.

The Little Theatre had tentatively planned to put on five different productions with a total of 50 performances. For example, one of the productions was Peter Rabbit, which had a five-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		5
Budgeted number of performances		50
Actors and directors wages	$	130,000
Stagehands wages		23,000
Ticket booth personnel and ushers wages		12,500
Scenery, costumes, and props		43,000
Theater hall rent		38,000
Printed programs		9,750
Publicity		13,500
Administrative expenses		43,000
Total	$	312,750

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 pin down, but the best estimate is that approximately 65% of the budgeted costs are fixed, 20% depend on the number of productions staged, and the remaining 15% 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 four productions and a total of 54 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:

The Little Theatre Actual Costs For the Year Ended December 31
Actual number of productions		4
Actual number of performances		54
Actors and directors wages	$	134,000
Stagehands wages		24,600
Ticket booth personnel and ushers wages		14,000
Scenery, costumes, and props		39,300
Theater hall rent		42,600
Printed programs		10,200
Publicity		12,500
Administrative expenses		41,450
Total	$	318,650

Required:

1. Prepare a flexible budget performance report for the year that shows both spending variances and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

The Little Theatre Flexible Budget Performance Report For the Year Ended December 31 Actual Results Revenue and Spending Variances Flexible Budget Activity Variances Planning Budget Number of productions 4 4 5 Number of performances 54 54 50 Actors' and directors' wages $ 134,000 F U $ 130,000 Stagehands' wages 24,600 F U 23,000 Ticket booth personnel and ushers' wages 14,000 U U 12,500 Scenery, costumes, and props 39,300 U F 43,000 Theatre hall rent 42,600 U U 38,000 Printed programs 10,200 F U 9,750 Publicity 12,500 U F 13,500 Administrative expenses 41,450 F F 43,000 Total $ 318,650 U U $ 312,750 sheet is drawn here This is the last question in the assignment. To submit, use Alt + S. To access other questions, proceed to the question map button. Next Visit question map Question 1 of 1 Total 1 of 1 Prev

Answer 1

The Little Theatre
Flexible Budget Performance Report
For the Year Ended December 31
	Actual Results	Revenue and Spending Variances		Flexible Budget	Activity Variances		Planning Budget
Number of productions	4			4			5
Number of performances	54			54			50
Actors' and directors' wages	134000	6400	F	140400	10400	U	130000
Stagehands' wages	24600	240	F	24840	1840	U	23000
Ticket booth personnel and ushers' wages	14000	500	U	13500	1000	U	12500
Scenery, costumes, and props	39300	4900	U	34400	8600	F	43000
Theatre hall rent	42600	1560	U	41040	3040	U	38000
Printed programs	10200	330	F	10530	780	U	9750
Publicity	12500	1700	U	10800	2700	F	13500
Administrative expenses	41450	346	F	41796	1204	F	43000
Total	318650	1344	U	317306	4556	U	312750

Calculations: Flexible Budget
Actors' and directors' wages	$130000 x 54/50	140400
Stagehands' wages	$23000 x 54/50	24840
Ticket booth personnel and ushers' wages	$12500 x 54/50	13500
Scenery, costumes, and props	$43000 x 4/5	34400
Theatre hall rent	$38000 x 54/50	41040
Printed programs	$9750 x 54/50	10530
Publicity	$13500 x 4/5	10800
Administrative expenses:
Fixed 65%	27950		27950
# of productions dependent 20%	8600	$8600 x 4/5	6880
# of performances dependent 15%	6450	$6450 x 54/50	6966
Total administrative expenses $	43000		41796