Stevens Center is a nonprofit organization devoted its stagingplays for children. The theater has a very small
full-time professional administrative staff. Through a specialarrangement with the actors' union, actors
and directors rehearse without pay and are paid only for actualperformances.
The costs from the current year's planning budget appear below.Steven Center had tentatively planned to put
on six different productions with a total of 108 performances.For example, one of the productions was The Lion King,
which has a six-week run with three performances on eachweekend.
Stevens Center
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
$215,000
Stagehands' wages
31,900
Ticket booth personnel and ushers' wages
16,400
Scenery, costumes, and props
107,900
Theater hall rent
53,000
Printed programs
26,800
Publicity
12,200
Administrative expense
44,200
Total
$507,400
Some of the costs vary with the number of productions, some withthe number of performances, and
some are fixed and depend on neither the number of productionsnor the number of performances.
The costs of scenery, costumes, props, and publicity vary withthe number of productions.
It doesn't make any differences how many times The Lion King isperformed, the cost of the
scenery is the same. Likewise, the cost of publicizing a playwith posters and radio commericals is the
same whether there are 10,20 or 30 performances of the play. Onthe other hand, the wages of
the actors, directors, stagehands, ticket booth personnel, andushers vary with the number of
perofrmances. The greater the number of performances, the higherthe wage costs will be. Similarily,
the costs of renting the hall and printing the programs willvary with the number of performances.
Administrative expenses are more difficult to pin down, but thebest estimate is that approximately
75% of the budgeted costs are fixed, 15% depend on the number ofproductions staged, and the
remaining 10% depend on the number of performances.
After the beginning of the year, the board of directors of thetheater authorized expanding the
theater's program to seven productions and a total of 168performances. Not surprisingly, actual
costs were considerably higher than the costs from the planningbudget. (Grants from donors
and ticket sales were also correspondingly higher, but are notshown here.) Data concerning the
actual costs appear below:
Stevens Center
Costs from the Planning Budget
For the Year Ended December 31
Actual number of productions
7
Actual number of performances
168
Actors' and directors' wages
$341,600
Stagehands' wages
49,500.00
Ticket booth personnel and ushers' wages
25,800.00
Scenery, costumes, and props
130,700.00
Theater hall rent
78,100.00
Printed programs
38,400.00
Publicity
15,200.00
Administrative expense
47,100.00
Total
$726,400
1. Prepare a flexible budget for the Stevens Center based on theactual activity of the year.
2. Prepare a flexible budget performance report for the yearthat shows both spending variance
and activity variances.
Stevens Theater
Flexible Budget Performance Report
For the Year Ended December 31
Actual Results
Spending Variances
Flexible Budget
Activity Variances
Planning Budget
Actual number of productions
7
Actual number of performances
168
Actors' and directors' wages
$341,600
Stagehands' wages
49,500.00
Ticket booth personnel and ushers' wages
25,800.00
Scenery, costumes, and props
130,700.00
Theater hall rent
78,100.00
Printed programs
38,400.00
Publicity
15,200.00
Administrative expense
47,100.00
Total
$726,400
3. If you were on the board of directors of the theater, wouldyou be pleased with how
costs were controlled during the year? Why or why not?
4. The cost formula provide figures for the average cost perproduction and average cost per performance.
How accurate do you think these figures would be for predictingthe cost of a new production or of an additiional performance of aparticular production?
Stevens Center is a nonprofit organization devoted its stagingplays for children. The theater has a very small | ||||||
full-time professional administrative staff. Through a specialarrangement with the actors' union, actors | ||||||
and directors rehearse without pay and are paid only for actualperformances. | ||||||
The costs from the current year's planning budget appear below.Steven Center had tentatively planned to put | ||||||
on six different productions with a total of 108 performances.For example, one of the productions was The Lion King, | ||||||
which has a six-week run with three performances on eachweekend. | ||||||
Stevens Center | ||||||
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 | $215,000 | |||||
Stagehands' wages | 31,900 | |||||
Ticket booth personnel and ushers' wages | 16,400 | |||||
Scenery, costumes, and props | 107,900 | |||||
Theater hall rent | 53,000 | |||||
Printed programs | 26,800 | |||||
Publicity | 12,200 | |||||
Administrative expense | 44,200 | |||||
Total | $507,400 | |||||
Some of the costs vary with the number of productions, some withthe number of performances, and | ||||||
some are fixed and depend on neither the number of productionsnor the number of performances. | ||||||
The costs of scenery, costumes, props, and publicity vary withthe number of productions. | ||||||
It doesn't make any differences how many times The Lion King isperformed, the cost of the | ||||||
scenery is the same. Likewise, the cost of publicizing a playwith posters and radio commericals is the | ||||||
same whether there are 10,20 or 30 performances of the play. Onthe other hand, the wages of | ||||||
the actors, directors, stagehands, ticket booth personnel, andushers vary with the number of | ||||||
perofrmances. The greater the number of performances, the higherthe wage costs will be. Similarily, | ||||||
the costs of renting the hall and printing the programs willvary with the number of performances. | ||||||
Administrative expenses are more difficult to pin down, but thebest estimate is that approximately | ||||||
75% of the budgeted costs are fixed, 15% depend on the number ofproductions staged, and the | ||||||
remaining 10% depend on the number of performances. | ||||||
After the beginning of the year, the board of directors of thetheater authorized expanding the | ||||||
theater's program to seven productions and a total of 168performances. Not surprisingly, actual | ||||||
costs were considerably higher than the costs from the planningbudget. (Grants from donors | ||||||
and ticket sales were also correspondingly higher, but are notshown here.) Data concerning the | ||||||
actual costs appear below: | ||||||
Stevens Center | ||||||
Costs from the Planning Budget | ||||||
For the Year Ended December 31 | ||||||
Actual number of productions | 7 | |||||
Actual number of performances | 168 | |||||
Actors' and directors' wages | $341,600 | |||||
Stagehands' wages | 49,500.00 | |||||
Ticket booth personnel and ushers' wages | 25,800.00 | |||||
Scenery, costumes, and props | 130,700.00 | |||||
Theater hall rent | 78,100.00 | |||||
Printed programs | 38,400.00 | |||||
Publicity | 15,200.00 | |||||
Administrative expense | 47,100.00 | |||||
Total | $726,400 | |||||
1. Prepare a flexible budget for the Stevens Center based on theactual activity of the year. | ||||||
2. Prepare a flexible budget performance report for the yearthat shows both spending variance | ||||||
and activity variances. | ||||||
Stevens Theater | ||||||
Flexible Budget Performance Report | ||||||
For the Year Ended December 31 | ||||||
Actual Results | Spending Variances | Flexible Budget | Activity Variances | Planning Budget | ||
Actual number of productions | 7 | |||||
Actual number of performances | 168 | |||||
Actors' and directors' wages | $341,600 | |||||
Stagehands' wages | 49,500.00 | |||||
Ticket booth personnel and ushers' wages | 25,800.00 | |||||
Scenery, costumes, and props | 130,700.00 | |||||
Theater hall rent | 78,100.00 | |||||
Printed programs | 38,400.00 | |||||
Publicity | 15,200.00 | |||||
Administrative expense | 47,100.00 | |||||
Total | $726,400 | |||||
3. If you were on the board of directors of the theater, wouldyou be pleased with how | ||||||
costs were controlled during the year? Why or why not? | ||||||
4. The cost formula provide figures for the average cost perproduction and average cost per performance. | ||||||
How accurate do you think these figures would be for predictingthe cost of a new production or of an additiional performance of aparticular production? | ||||||