7-28 Static and flexible budgets, service sector. Student Finance (StuFi) is a startup that aims to usethe power of social communities to transform the student loan market. It connects participants througha dedicated lending pool, enabling current students to borrow from a school's alumni community. StuFi'srevenue model is to take an upfront fee of 40 basis points (0.40%) each from the alumni investor and thestudent borrower for every loan originated on its platform.StuFi hopes to go public in the near future and is keen to ensure that its financial results are in line with thatambition. StuFi's budgeted and actual results for the third quarter of 2014 are presented below.HomeInsertAPage Layout12New loans originated3 Average amount of loan4 Variable costs per loan:5Professional labor6Credit verification7Federal documentation fees8Courier services9 Administrative costs (fixed)10 Technology costs (fixed)BFormulasStatic Budget8,200$145,000Data Reviewс$360 (8 hrs at $45 per hour)$100$120$50$800,000$1,300,000DViewEActual Results10,250$162,000$475 (9,5 hrs at $50 per hour)$100$125$54$945,000$1,415,0001. Prepare StuFi's static budget of operating income for the third quarter of 2014.2. Prepare an analysis of variances for the third quarter of 2014 along the lines of Exhibit 7-2; identify thesales volume and flexible budget variances for operating income.3. Compute the professional labor price and efficiency variances for the third quarter of 2014.4. What factors would you consider in evaluating the effectiveness of professional labor in the thirdquarter of 2014.Required

Static budget is a forecasted reports of revenue and expenses for a specific period of time which…

1. Prepare StuFi's static budget of operating income for the third quarter of 2014. 2. Prepare an analysis of variances for the third quarter of 2014 along the lines of Exhibit 7-2; identify the sales volume and flexible budget variances for operating income. 3. Compute the professional labor price and efficiency variances for the third quarter of 2014. 4. What factors would you consider in evaluating the effectiveness of professional labor in the third quarter of 2014.

1. Prepare StuFi's static budget of operating income for the third quarter of 2014. 2. Prepare an analysis of variances for the third quarter of 2014 along the lines of Exhibit 7-2; identify the sales volume and flexible budget variances for operating income. 3. Compute the professional labor price and efficiency variances for the third quarter of 2014. 4. What factors would you consider in evaluating the effectiveness of professional labor in the third quarter of 2014.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Why is the identification of favorable and unfavorable variances so important to a company? How can the identification of the variances help management control costs? Please explain. As you are considering the flexible budgeting topic of the week, it is important for you to look at this analysis as a significant contribution to the management of the company. Knowing what the bottom line profit or loss is important. But what is more important is to understand how your actual results varied in terms of units sold versus how the actual cost of each unit differed from the budget.
please answer complete and correct and correct with full working please please answer in text respected expert provide fully explained , computed and formulated answer or skip thanks . Attempt if you can answer correctly without copy paste from other answer otherwise skip but please please do not waste my question or time by giving incomplete or incorrect answer thanks
Using a flexible budgeting approach how do I prepare a performance report for the current department for September 2016, comparing actual overhead cost with budgeted overhead cost for 5700 hours. Separate overhead costs into variable and fix components and show the amounts of any variances between actual and budget in amounts.
TV Timers, Incorporated, manufactures time control devices for TV's. The firm has the following operating data for its operations in July: Actual market size Budgeted market size Actual market share Budgeted market share Budgeted average contribution margin Actual average contribution margin What is the company's market share variance? A. $1,590 favorable. B. $1,784 favorable. C. $1,740 favorable. D. $2,070 favorable. E. $3,660 favorable. 14,500 16,300 34% 32% $6.00 $5.25
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February: Variable Fixed Component per Month Component per Job $ 277 Actual Total for February $ 27,720 $ 8,350 $ 8,370 Revenue Technician wages $ 8,500 Mobile lab operating expenses $ 4,900 $ 33 Office expenses $ 2,400 $2 $ 2,470 Advertising expenses $ 1,600 $ 1,670 Insurance $ 2,850 $ 2,850 Miscellaneous expenses $ 960 $ 1 $ 375 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $33 per job, and the actual mobile lab operating expenses for February were $8,370. The company expected to work 110 jobs in February, but actually worked 120 jobs. Required: Prepare a flexible budget performance report showing AirQual Test Corporation's revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting "F"…
Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,300 pounds of oysters in August. The company's flexible budget for August appears below: Quilcene Oysteria Flexible Budget Actual pounds (q) Revenue ($4.15q) Expenses: Packing supplies ($0.35q) Oyster bed maintenance ($3,100) Wages and salaries ($2,500 + $0.35q) Shipping ($0.60q) Utilities ($1,210) For the Month Ended August 31 Other ($400 + $0.019) Total expenses Net operating income Actual pounds Revenue The actual results for August were as follows: Expenses: Quilcene Oysteria Income Statement For the Month Ended August 31 Packing supplies Oyster bed maintenance Wages and salaries Shipping Utilities Other Total expenses Net operating income 7,300 $ 30,295 2,555 3,100 5,055 4,380 1,210 473 16,773 $ 13,522 7,300 $ 26,600 2,725 2,960 5,465 4,110 1,020 1,093 17,373 $ 9,227
Use the given data shown in the graph. A. What is the budgeted fixed cost per period? B. What is the budgeted variance cost per unit? C. What is the value of F (that is, the flexible budget for an activity of 8,000 units)? D. What is the flexible budget cost amount if the actual activity had been 16,000 units?
In analyzing company operations, the controller of the Carson Corporation found a $250,000 favorable flexible budget revenue variance. The variance was calculated by comparing the actual results with the flexible budget. This variance can be wholly explained by: (CMA adapted) Multiple Choice О the total flexible budget variance. О the total static budget variance. О changes in unit selling prices. changes in the number of units sold.
H
These are True/False questions. ____ 6. If the total unit cost of manufacturing Product Y is currently $36 and the total unit cost after modifying the style is estimated to be $48, the differential cost for this situation is $12. ____ 7. A process whereby the effect of fluctuations in level of activity is built into the budgeting system is referred to as flexible budgeting. ____ 8. In an investment center, the manager has the responsibility and the authority to make decisions that affect not only costs and revenues, but also the plant assets invested in the center. ____ 9. The capital expenditures budget summarizes future plans for acquisition of fixed assets. ____ 10. The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called capital investment analysis.
A company that wants to report both spending and efficiency variances for 1 point overhead must compute budget allowances for both the actual amount of activity that occurred and the standard level of activity allowed for the level of output achieved. True O False