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 $ 220,320
Stagehands wages 36,720
Ticket booth personnel and ushers wages 20,520
Scenery, costumes, and props 108,240
Theater hall rent 58,320
Printed programs 31,320
Publicity 12,240
Administrative expenses 47,520
Total $ 535,200
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 were as follows:
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 $ 352,600
Stagehands wages 56,300
Ticket booth personnel and ushers wages 32,900
Scenery, costumes, and props 130,800
Theater hall rent 84,200
Printed programs 44,500
Publicity 15,500
Administrative expenses 53,500
Total $ 770,300
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 Activity Variances Flexible
Budget
Planning
Budget
Number of productions 7 6
Number of performances 168 108
Actors’ and directors’ wages 352,600 220,320
Stagehands’ wages 56,300 36,720
Ticket booth personnel and ushers’ wages 32,900 20,520
Scenery, costumes, and props 130,800 108,240
Theatre hall rent 84,200 58,320
Printed programs 44,500 31,320
Publicity 15,500 12,240
Administrative expenses 53,500 47,520
Total $ 770,300 $ 535,200
Garrison 17e Rechecks 2021-10-23
08/02/2024, 01:09 Assignment Print View
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References
Worksheet Learning Objective: 09-02
Calculate and interpret activity
variances.
Learning Objective: 09-05 Prepare a planning budget and a
flexible budget with more than one cost driver.
Difficulty: 3 Hard Learning Objective: 09-03
Calculate and interpret revenue
and spending variances.
Learning Objective: 09-06 Prepare a performance report with more
than one cost driver that combines activity variances and revenue
and spending variances
