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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?

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Jean Keeling
Jean KeelingLv2
28 Sep 2019

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