Answer:

1. Prepare a performance report for the party that shows how actual costs differed from the budget.
To prepare a performance report, we'll create a table comparing the budgeted costs to the actual costs, and then calculate
the variances for each category.

**Performance Report

Category Budgeted Amount Actual Amount Variance (Actual - Budget)

Room Rental $170 $170 ($0) N/A
Food $660 $875 ($215) Over budget
Entertainment $570 $570 ($0) N/A
Decorations $210 $270 ($60) Over budget
**Total** $1,610 $1,885 ($275) Over budget

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

Management by exception focuses on areas where actual performance significantly deviates from expected performance.
Typically, variances that are large in absolute terms or as a percentage of the budget are examined.

Costs That Deserve Further Examination:

1. **Food**:
- **Variance**: $215 over budget
- **Percentage Variance**: approx. 32.6%
- **Reason for Examination**: This is a significant variance both in absolute terms and as a percentage. Food cost
increased significantly, and understanding the cause (e.g., higher prices, more attendees, or more expensive food choices)
is important.
2. **Decorations**:
- **Variance**: $60 over budget
- **Percentage Variance**: approx. 28.6%
- **Reason for Examination**: This is a noticeable percentage increase and should be reviewed to determine why the
costs were higher (e.g., more elaborate decorations than planned).

Justification for Focusing on These Costs:

- **Material Impact**: The food cost had the largest absolute increase and a significant percentage increase, impacting
the overall budget the most.
- **Proportional Increase**: The decorations cost also increased notably in percentage terms, which indicates that either
the price or quantity of decorations was higher than anticipated.
By examining these variances, the fraternity can understand the reasons behind the cost overruns and take steps to manage
future events more effectively, possibly by revising budgets or controlling expenses more tightly.