Reference no: EM132649754

This scenario puts you in charge of preparing a budget for the Redmond Management Association annual public relations luncheon.

The Redmond Management Association held its annual public relations luncheon in April Year 2. Based on the previous year's results, the organization allocated $25, 290 of its operating budget to cover the cost of the luncheon. To ensure that cost are appropriately controlled. Molly Hubbard, the treasurer, prepared the following budget for the Year 2 luncheon.

The Budget for the luncheon was based on the following expectations:

1. The meal cost per person expected to be $14.50. The cost driver for meals was attendance, which was expected to be 1,400 individuals.

2. Postage was based on $0.49 per individual and 3,000 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed.

3. The facility charge is $1,000 for a room that will hold up to 1,600 people. The charge for one to hold more than 1,600 people is $1,500.

4. A fixed amount was designated for printing, decorations, the speaker's gift and publicity.

Luncheon Budget, April Year 2

Operating funds allocated $25,290

Expenses

Variable cost

Meals (1,400 *$14.50) $20,300

Postage (3000*$0.49) $1,470

Fixed cost

Facility $1000

Printing $950

Decorations $840

Speaker's gift $130

Publicity $600

Total expenses $25,290

Budget surplus (deficit) $ 0

Actual results for the luncheon follow.

Operating funds allocated $25,290

Expenses

Variable cost

Meals (1,620 * $15.50) $25,110

Postage (4,000 * $0.49) $1,960

Fixed cost

Facility $1500

Printing $950

Decorations $840

Speaker's gift $130

Publicity $600

Total expenses $31,090

Budget surplus (deficit) $ (5,800)

Use Excel-showing all work and formulas-to complete the following:

Question 1. Show the flexible budget.

Question 2. Compute the sales volume variance and the variable cost volume variances based on a comparison between the master budget and the flexible budget.

Question 3. Compute flexible budget variances by comparing the flexible budget with the actual results.

Question 4. Summarize the results of the sales volume and variable cost volume variances computations based on the comparison between the master budget and the flexible budget.

Question 5. Summarize the results of the flexible budget variances computations based on the comparison between the flexible budget and the actual results.

Question 6. Justify the favorable or unfavorable budget variances.

Question 7. Since this is a not-for-profit organization, address why anyone should be concerned with meeting the budget.

Question 8. Make recommendations for what can be done differently to stay on budget for future luncheons. Provide specific examples to support your recommendations.