5. Teaparty is a small tax consulting firm offering its services to both corporate and private clients. Teaparty has installed a standard costing system whereby its CEO can analyze variances at the end of each year. The (static) budget for Year 2 is set equal to the actual data of Year 1. In Year 1, Teaparty served 250 clients, generating total revenues of $25,000. Its variable costs in Year 1 consisted of $15,000 professional labor costs, and $5,000 administrative support costs. Teaparty's fixed cost in Year 1 was $2,500. Teaparty's actual data for Year 2 is as follows: an actual number of 200 clients served resulted in actual revenues of $27,500; actual professional labor cost was $17,000; actual administrative support cost was $4,500; and actual fixed cost was $3,000. Required: Compute sales-volume variances and flexible-budget variances for revenues, professional labor costs, administrative support costs, and for fixed costs. Units (clients) Revenues Variable costs: Profess labor Admin support Contribution margin Fixed cost Operating income Based on Year 1 Static Budget 250 25,000 15,000 5,000 5,000 2,500 2,500 SVV For U Flex. Budget FBV Year 2 For U Actual 200 27,500 17,000 4,500 6,000 3,000 3,000
5. Teaparty is a small tax consulting firm offering its services to both corporate and private clients. Teaparty has installed a standard costing system whereby its CEO can analyze variances at the end of each year. The (static) budget for Year 2 is set equal to the actual data of Year 1. In Year 1, Teaparty served 250 clients, generating total revenues of $25,000. Its variable costs in Year 1 consisted of $15,000 professional labor costs, and $5,000 administrative support costs. Teaparty's fixed cost in Year 1 was $2,500. Teaparty's actual data for Year 2 is as follows: an actual number of 200 clients served resulted in actual revenues of $27,500; actual professional labor cost was $17,000; actual administrative support cost was $4,500; and actual fixed cost was $3,000. Required: Compute sales-volume variances and flexible-budget variances for revenues, professional labor costs, administrative support costs, and for fixed costs. Units (clients) Revenues Variable costs: Profess labor Admin support Contribution margin Fixed cost Operating income Based on Year 1 Static Budget 250 25,000 15,000 5,000 5,000 2,500 2,500 SVV For U Flex. Budget FBV Year 2 For U Actual 200 27,500 17,000 4,500 6,000 3,000 3,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
6
![5. Teaparty is a small tax consulting firm offering its services to both corporate and private clients.
Teaparty has installed a standard costing system whereby its CEO can analyze variances at the end
of each year. The (static) budget for Year 2 is set equal to the actual data of Year 1. In Year 1,
Teaparty served 250 clients, generating total revenues of $25,000. Its variable costs in Year 1
consisted of $15,000 professional labor costs, and $5,000 administrative support costs. Teaparty's
fixed cost in Year 1 was $2,500.
Teaparty's actual data for Year 2 is as follows: an actual number of 200 clients served resulted in
actual revenues of $27,500; actual professional labor cost was $17,000; actual administrative
support cost was $4,500; and actual fixed cost was $3,000.
Required: Compute sales-volume variances and flexible-budget variances for revenues,
professional labor costs, administrative support costs, and for fixed costs.
Units (clients)
Revenues
Variable costs:
Profess labor
Admin support
Contribution
margin
Fixed cost
Operating
income
Based on
Year 1
Static Budget
250
25,000
15,000
5,000
5,000
2,500
2,500
ᏚᏙᏙ
For U Flex. Budget
FBV
Year 2
For U Actual
200
27,500
17,000
4,500
6,000
3,000
3,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4aee4785-8a37-4a6f-9316-1b4d0ef14e8a%2F0f257adf-6f0d-493d-b878-d8a432c152ee%2F1jnwsep_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5. Teaparty is a small tax consulting firm offering its services to both corporate and private clients.
Teaparty has installed a standard costing system whereby its CEO can analyze variances at the end
of each year. The (static) budget for Year 2 is set equal to the actual data of Year 1. In Year 1,
Teaparty served 250 clients, generating total revenues of $25,000. Its variable costs in Year 1
consisted of $15,000 professional labor costs, and $5,000 administrative support costs. Teaparty's
fixed cost in Year 1 was $2,500.
Teaparty's actual data for Year 2 is as follows: an actual number of 200 clients served resulted in
actual revenues of $27,500; actual professional labor cost was $17,000; actual administrative
support cost was $4,500; and actual fixed cost was $3,000.
Required: Compute sales-volume variances and flexible-budget variances for revenues,
professional labor costs, administrative support costs, and for fixed costs.
Units (clients)
Revenues
Variable costs:
Profess labor
Admin support
Contribution
margin
Fixed cost
Operating
income
Based on
Year 1
Static Budget
250
25,000
15,000
5,000
5,000
2,500
2,500
ᏚᏙᏙ
For U Flex. Budget
FBV
Year 2
For U Actual
200
27,500
17,000
4,500
6,000
3,000
3,000
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