Mr. Snow was extremely upset with the budget deficit. He immediately called you, the treasurer, to complain about the budget variance for the meal cost. He told you that the added dessert caused the meal cost to be $4,810 ($25,110-$20,300) over budget. He added, I could expect a couple hundred dollars one way or the other, but several thousand is totally unacceptable. At the next budget meeting of the budget committee, I want you to explain what happened.
Please note: Summarize, Justify and Make Recommendations means to explain in writing with significant written content.
Also: Make sure to scroll down to the resources section of this content.
Create a 6- to 8-slide presentation for the budget committee meeting. Complete the following in your presentation:
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.
Presentation for Budget Committee Meeting
Slide 1: Title Slide
- Title: Budget Variance Analysis for Year 2 Luncheon
- Subtitle: Addressing the Meal Cost Variance
- Presented by: [Your Name], Treasurer
- Date: [Date]
Slide 2: Overview of Variances
- Sales Volume Variance:
- Result: $2,215 Favorable
- Explanation: Increased attendance (350 vs. budgeted 300) resulted in higher revenue than anticipated.
- Variable Cost Volume Variance:
- Result: $3,834.50 Unfavorable
- Explanation: Higher variable costs due to added dessert and increased attendee count.
Slide 3: Flexible Budget Variances
- Revenue Variance:
- Result: $1,505 Unfavorable
- Explanation: Actual revenue ($28,000) was lower than flexible revenue ($29,505) due to pricing issues or lower-than-expected sales.
- Variable Cost Variance:
- Result: $165.50 Unfavorable
- Explanation: Actual variable costs ($27,000) exceeded flexible variable costs ($26,834.50), primarily driven by the added dessert expense.
Slide 4: Justification of Variances
- Favorable Sales Volume Variance:
- Positive impact from increased attendance.
- Unfavorable Variable Cost Volume Variance:
- Added dessert significantly affected meal costs, leading to a major budget deficit.
- Importance of Tracking Variances:
- Identification of cost drivers and their impact on overall budget performance.
Slide 5: The Importance of Budget Compliance
- Rationale for Budgeting in Not-for-Profit Organizations:
- Ensures resources are allocated effectively.
- Maintains financial health and sustainability.
- Builds trust with stakeholders and donors by demonstrating fiscal responsibility.
- Impact of Deficits:
- Reduced capacity to fund future initiatives and programs.
Slide 6: Recommendations for Future Budgeting
1. Implement Cost Control Measures:
- Review catering contracts to lock in pricing.
- Evaluate the necessity of additional menu items such as desserts.
2. Conduct Post-Event Evaluations:
- Analyze attendee feedback on meal preferences to better predict costs.
- Adjust menu offerings based on historical data.
3. Increase Budget Monitoring Frequency:
- Regular reviews of spending against budget throughout planning stages.
- Utilize software tools for real-time budget tracking.
Slide 7: Specific Examples of Recommendations
- Catering Options:
- Negotiate fixed pricing with caterers to avoid last-minute price increases.
- Consider simpler meal options that provide value without significant cost increases.
- Audience Engagement:
- Survey potential attendees before finalizing menu items to gauge interest and prevent over-ordering.
- Enhanced Planning:
- Establish a contingency fund within the budget to accommodate unexpected expenses without affecting overall financial health.
Slide 8: Conclusion
- Summary of Findings:
- Increased attendance positively impacted revenue.
- Added dessert significantly contributed to exceeding budgeted meal costs.
- Commitment to Improvement:
- We are dedicated to refining budgeting processes for future luncheons.
- Next Steps:
- Encourage open dialogue about budget management strategies at the upcoming meetings.
This presentation structure provides a clear and concise overview of the budget variances experienced during the Year 2 luncheon while offering actionable recommendations to improve future budgeting practices.