2. Hallmark is a charity supported by donations that provides free meals to the

Question

2. Hallmark is a charity supported by donations that provides free meals to the homeless. The budget for August was based on 3,000 meals. The director has provided the following cost data to use in the budget: groceries, $3.85 per meal; kitchen operations, $4,600 per month plus $1.15 per meal; administrative expenses, $3,800 per month plus $0.85 per meal; and fundraising expenses, S1,600 per month. The director has also provided the statement of actual expenses for the month: Hallmark Statement of Expenses For the month ended August 31 Actual meals 2,900 meals Groceries Kitchen operations Administrative expenses Fundraising expenses Total expense $10,735 8,155 6,305 1,620 $26,815 Required: Prepare a flexible budget performance report showing both the activity variances and the spending variances for each of the expenses and for total expenses for August. Label each variance as favorable (F) or unfavorable (U)

Explanation / Answer

Flexible budget performance report :

Actual results Spending variance Flexible budget Activity variance Static budget Meals 2900 2900 3000 Groceries 10735 430 F 11165 385 F 11550 Kitchen operations 8155 220 U 7935 115 F 8050 Administrative expense 6305 40 U 6265 85 F 6350 Fundraising expenses 1620 20 U 1600 None 1600 Total expense 26815 150 F 26965 585 F 27550

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