Beta Alpha Psi, the accounting honorary fraternity, held a homecoming party. The fraternity expected attendance of 80 persons and prepared the following budget:

Room rental .. $ 170

Food ....... 660

Entertainment .. 570

Decorations ... 210

Total ...... $1,610

After Beta Alpha Psi paid all the bills for the party, the total cost came to $1,885 or $275 over budget. Details are $170 for room rental; $875 for food; $570 for entertainment; and $270 for decorations. Ninety-six persons attended the party.

1. Prepare a performance report for the party that shows how actual costs differed from the budget. That is, include in your report the budgeted amounts, actual amounts, and variances.

2. Suppose the fraternity uses a management-by-exception rule. Which costs deserve further examination? Why?