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 six different productions with a total of 108 performances. For example, one of the productions was Peter Rabbit, which had a six-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		6
Budgeted number of performances		108
Actors and directors wages	$	233,280
Stagehands wages		49,680
Ticket booth personnel and ushers wages		33,480
Scenery, costumes, and props		108,960
Theater hall rent		71,280
Printed programs		44,280
Publicity		12,960
Administrative expenses		60,480
Total	$	614,400

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 analyze, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions staged, and the remaining 10% 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 seven productions and a total of 168 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		7
Actual number of performances		168
Actors and directors wages	$	385,700
Stagehands wages		76,100
Ticket booth personnel and ushers wages		53,900
Scenery, costumes, and props		131,400
Theater hall rent		102,800
Printed programs		63,100
Publicity		16,700
Administrative expenses		71,500
Total	$	901,200

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.)

Answer 1

				Actual	Revenue and		Flexible	Planning Budget		Planning
				results	spending variance		budget			Budget
Number of productions				7			7			6
number of performances				168			168			108
Actors and directors wages				385,700	22,820	U	362880	129,600	U	233,280
Stagehands wages				76,100	1,180	F	77280	27,600	U	49,680
Ticket booth personnel and usher's wages				53,900	1,820	U	52080	18,600	U	33,480
Scenery,costumes and props				131,400	4,280	U	127120	18,160	U	108,960
Theater hall rent				102,800	8,080	F	110880	39,600	U	71,280
printed programs				63,100	5,780	F	68880	24,600	U	44,280
publicity				16,700	1,580	U	15120	2,160	U	12,960
administrative expenses				71,500	6,148	U	65352	4,872	U	60,480
total				901,200	21,608	U	879592	265,192	U	614,400

working

			planned
			6		Actual number of productions					7
			108		Actual number of perormances					168
		233,280	2160		Actors and directors wages					362880
		49,680	460		Stagehands wages					77280
		33,480	310		Ticket booth personnel and usher's wages					52080
		108,960	18160		Scenery,costumes and props					127120
		71,280	660		Theater hall rent					110880
		44,280	410		printed programs					68880
		12,960	2160		publicity					15120
45360	9072	6048			administrative expenses					65352
					total