The Little Theatre is a nonprofit organization devoted tostaging plays for children. The theater has a very small full-timeprofessional administrative staff. Through a special arrangementwith the actors’ union, actors and directors rehearse without payand are paid only for actual performances.

The Little Theatre had tentatively planned to put on sixdifferent productions with a total of 108 performances. Forexample, one of the productions was Peter Rabbit, which had asix-week run with three performances on each weekend. The costsfrom the current year’s planning budget appear below.

The Little Theatre Costs from the Planning Budget For the Year Ended December 31
Budgeted numberof productions		6
Budgeted numberof performances		108
Actors anddirectors wages	$	235,440
Stagehandswages		51,840
Ticket boothpersonnel and ushers wages		35,640
Scenery,costumes, and props		109,080
Theater hallrent		73,440
Printedprograms		46,440
Publicity		13,080
Administrativeexpenses		44,460
Total	$	609,420

Some of the costs vary with the number of productions, some withthe number of performances, and some are fixed and depend onneither the number of productions nor the number of performances.The costs of scenery, costumes, props, and publicity vary with thenumber of productions. It doesn’t make any difference how manytimes Peter Rabbit is performed, the cost of the sceneryis the same. Likewise, the cost of publicizing a play with postersand radio commercials is the same whether there are 10, 20, or 30performances of the play. On the other hand, the wages of theactors, directors, stagehands, ticket booth personnel, and ushersvary with the number of performances. The greater the number ofperformances, the higher the wage costs will be. Similarly, thecosts of renting the hall and printing the programs will vary withthe number of performances. Administrative expenses are moredifficult to analyze, but the best estimate is that approximately75% of the budgeted costs are fixed, 15% depend on the number ofproductions staged, and the remaining 10% depend on the number ofperformances.

After the beginning of the year, the board of directors of thetheater authorized expanding the theater’s program to sevenproductions and a total of 168 performances. Not surprisingly,actual costs were considerably higher than the costs from theplanning budget. (Grants from donors and ticket sales were alsocorrespondingly higher, but are not shown here.) Data concerningthe actual costs appear below:

The Little Theatre Actual Costs For the Year Ended December 31
Actual number ofproductions		7
Actual number ofperformances		168
Actors anddirectors wages	$	391,300
Stagehandswages		79,400
Ticket boothpersonnel and ushers wages		57,400
Scenery,costumes, and props		131,500
Theater hallrent		105,900
Printedprograms		66,200
Publicity		16,900
Administrativeexpenses		49,300
Total	$	897,900

Required:

1. Prepare a flexible budget for The Little Theatre based on theactual activity of the year.

2. Prepare a report for the year that shows the spendingvariances for all expense items.