Reference no: EM132775134
The Little Theater is a nonprofit organization devoted to staging plays for children. The costs from the current year's planning budget appear below. The Little Theater had tentatively 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 Theater
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.........................................216,000
Stagehands' wages......................................................... 32,400
Ticket booth personnel and ushers' wages..................... 16,200
Scenery, costumes, and props........................................ 108,000
Theater hall rent.............................................................. 54,000
Printed programs............................................................ 27,000
Publicity......................................................................... 12,000
Administrative expenses................................................ 43,200
Total ............................................................................... $508,800
Some of the costs vary with the number of productions, some with the number of performances, and some are fixed and depend on neither the number of productions nor the number of performances. The cost of publicizing a play with posters and radio commercials is the same whether there are 10, 20, or 30 performances of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. The greater the number of performances, the higher the wage costs will be. Similarly, the costs of renting the hall and printing the programs will vary with the number of performances. Administrative expenses are more difficult to pin down, but the best estimate is that approximately 75% of the budgeted costs are fixed, 15% depend on the number of productions staged, and the remaining 10% depend on the number of performances.
After the beginning of the year, the board of directors of the theater authorized expanding the theater's program to seven productions and a total of 168 performances. Data concerning the actual costs appear below:
The Little Theater
Actual Costs
For the Year Ended December 31
Actual number of productions......................................7.
Actual number of performances..................................... 168
Actors' and directors' wages.........................................341,800
Stagehands' wages......................................................... 49,700
Ticket booth personnel and ushers' wages..................... 25,900
Scenery, costumes, and props........................................130,600
Theater hall rent..............................................................78,000
Printed programs...........................................................38,300.
Publicity......................................................................... 15,100
Administrative expenses................................................47,500
Total............................................................................... $726,900
Problem 1: Elaborate a flexible budget for The Little Theater based on the actual activity of the year.