For this assignment, refer to the scenario located in “Problems – Series A,” section 8-19A of Ch. 8, “Performance Evaluation,“ of Fundamentals of Managerial Accounting Concepts. This scenario puts you in charge of preparing a budget for the Redmond Management Association annual public relations luncheon.

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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 costs would be appropriately controlled, Molly Hubbard, the treasurer, prepared the following budget for the Year 2 luncheon.

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

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• The meal cost per person was expected to be $14.50. The cost driver for meals was attendance, which was expected to be 1,400 individuals.
• Postage was based on $0.49 per invitation and 3,000 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed.
• The facility charge is $1,000 for a room that will accommodate up to 1,600 people; the charge for one to hold more than 1,600 people is $1,500.
• A fixed amount was designated for printing, decorations, the speakers’ gift, and publicity.

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Redmond Management Ass.

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Operating funds allocated $25,290

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Expenses

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Variable costs

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

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Postage(3,000*$0.49) 1,470

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Fixed costs

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Facility 1,000

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Printing 950

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Decorations 840

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Speakers’ gift 130

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Publicity 600

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Total expenses 25,290

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Actual Redmond Management Budget

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Operating funds allocated 25,290

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Expenses

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Variable cost

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

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Postage(4,000*$0.49) 1960

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Fixed costs

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Facility 1,500

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Printing 950

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Decorations 840

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Speakers’ gift 130

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Publicity 600

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Total expenses 21,090

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Budget deficit (5,800)

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Read the scenario in the textbook and complete the activity below.

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

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• Prepare a flexible budget.
• Compute the sales volume variance and the variable cost volume variances based on a comparison between the master budget and the flexible budget.
• Compute flexible budget variances by comparing the flexible budget with the actual results.

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Create a 6- to 8-slide presentation for the budget committee meeting. Complete the following in your presentation:

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• 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.
• Summarize the results of the flexible budget variances computations based on the comparison between the flexible budget and the actual results.
• Justify the favorable or unfavorable budget variances.
• Since this is a not-for-profit organization, address why anyone should be concerned with meeting the budget.
• Make recommendations for what can be done differently to stay on budget for future luncheons. Provide specific examples to support your recommendations.