CASE 9-28 Performance Report with More than One Cost Driver [LO9-4, LO9-5] The L
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Question
CASE 9-28 Performance Report with More than One Cost Driver [LO9-4, LO9-5] 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 costs from the current year's planning budget appear below. The Little Theatre had ten- tatively 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 Little Theatre Costs from the Planning Budget For the Year Ended December 31 108 $216,000 32,400 16,200 Scenery, costumes, and props108,000 Ticket booth personnel and ushers' wages . . . . . . . . Publicity. Administrative expenses... Total 4,000 27,000 12,000 43,200 $508,800Explanation / Answer
Answer:
1
The Little Theatre
Flexible Budget
Year Ended December 31st
Actual Number of Productions
7
Actual Number of Perfomances
168
Actors' and Director Wages
336,000
Stagehands' Wages
50,400
Ticket Booth Personnel and Usher's Wages
25,200
Scenery, Costumes, and Props
126,000
Tall Hall Rent
84,000
Printed Programs
42,000
Publicity
14,000
Administrative Expenses
46,680
Total Expense
724,280
Calculation for the flexible Budget
Planning Budget
Per
performce cost
For
flexible budget
Number of Productions
6
Nmber of Promances
108
Actors' and Director's Wages
216,000
2000
168*2000
336000
Stagehand's Wages
32,400
300
168*300
50400
Ticket Booth Personnel and Usher's Wages
16,200
150
168*150
25200
Scenery, Costumes, and Props
108,000
18000
7*18000
126000
Theater Hall Rent
54,000
500
168*500
84000
Printed Programs
27,000
250
168*250
42000
Publicity
12,000
2000
2000*7
14000
Administrative Expenses
43,200
32400+1080*7+40*168
46,680
2
The Little Theater
Flexible Budget Performance Report
Year Ended December 31st
Planning Budget
Activity Variance
Flexible Budget
Spending Variance
Actual Results
A
Number of Productions
6
7
7
Nmber of Promances
108
168
168
Actors' and Director's Wages
216,000
120,000 U
336,000
5,800U
341,800
Stagehand's Wages
32,400
18,000 U
50,400
700F
49,700
Ticket Booth Personnel and Usher's Wages
16,200
9,000 U
25,200
700 U
25,900
Scenery, Costumes, and Props
108,000
18,000U
126,000
4,600 U
130,600
Theater Hall Rent
54,000
30,000U
84,000
6,000 F
78,000
Printed Programs
27,000
15,000U
42,000
3,700 F
38,300
Publicity
12,000
2,000U
14,000
1,100 U
15,100
Administrative Expenses
43,200
3,480U
46,680
820U
47,500
Total Expenses
508,800
215,800U
724,280
2620U
726,900
3
The total of negative spending variance is an insignificant percentage of the total cost, this keeps cost under control. The configuration of the variances shows good organization. Unfavorable variances such as scenery, costumes, actors, directors, theater hall rent, and even printed programs are value-added and it may be allowed for extra spending.
4
Average cost cannot be the best indication of additional cost. Production X might use less actors, and props that Production Y, and their costumes (X) might be less expensive than Y, so average cost does not work as well for this case.
The Little Theatre
Flexible Budget
Year Ended December 31st
Actual Number of Productions
7
Actual Number of Perfomances
168
Actors' and Director Wages
336,000
Stagehands' Wages
50,400
Ticket Booth Personnel and Usher's Wages
25,200
Scenery, Costumes, and Props
126,000
Tall Hall Rent
84,000
Printed Programs
42,000
Publicity
14,000
Administrative Expenses
46,680
Total Expense
724,280
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