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

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Select all that were the source for the Direct Labor favorable rate variance. a. Actual direct labor hours per job were less than budgeted direct labor hours per job. b. Actual direct labor cost per hour was less than budgeted direct labor cost per hour. c. Actual direct labor hours per job were greater than budgeted direct labor hours per job. d. Actual number of jobs completed was greater than budgeted number of jobs. e. Actual number of jobs completed was less than budgeted number of jobs. f. Actual direct labor cost per hour was greater than budgeted direct labor cost per hour.
With the information provided - please calculate the variances for March 2022. (NOTE: - Each answer must state whether the variance is favorable or unfavorable. 1. Labour rate variance 2. Labour efficiency variance 3. Variable overheads efficiency variance 4. Variable overheads expenditure variance
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The financial director of SolarTech Ltd meets with the research director quarterly to compare actual and budgeted costs and follow up on any unexpected variances?
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.
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Primara Corporation has a standard costing system in which it applies overhead to products on the basis of the standard direct labour- hours allowed for the actual output of the period. Data concerning the most recent year appear below: Total budgeted fixed overhead cost for the year Actual fixed overhead cost for the year Budgeted standard direct labour-hours (denominator level of activity) Actual direct labour-hours Standard direct labour-hours allowed for the actual output $ 500,000 $ 508,000 50,000 54,000 52,000 Required: 1. Compute the fixed portion of the predetermined overhead rate for the year. Predetermined overhead rate per DLH
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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"…
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