Exchange Corp. Analysis of Revenues and Costs For the Month Ended May 31 Actual Planning Budget Unit Revenues Unit Revenues and Costs and Costs Variances Exchanges completed 50 40 .... ·. Revenue. $385 $395 $10 U Expenses: Legal and search fees Office expenses .... Equipment depreciation Rent 184 112 165 19 U 135 23 F 10 2F 36 45 9F Insurance 4 1 F Total expense 344 360 16 F Net operating income $ 41 $ 35 $ 6F .... Roshardying Fleible Budget Pefomance Repot For the Month Ended March 31 Revenue and O Spending Acity Actual Varinces Rexble Verinces Paning Results (0-0 Budget 2-9) Budget Client-vits 1,100 1,00 1,00 Rasenue $180.0). $194,200 $3.800 U $198000 $18,000 F $1800 Epersesr Wagesad sarie 6500 $370. Haistigspie $150). 106,900 1,00 U 105,700 3700 U 102000 ..... 1,620 30 F 1,60 150 U 1,500 410 U 4,100 6870 2360 U 4,510 Becicty $1,00 $0.0). Rert (2,50). Labity isuance $2.0. Emplyee heath isuance $21,30) Miscelaneus $1.200 $20). 1,50 60 F 1,510 10 U 1600 28,00 0 2,500 28,00 2,800 2.00 2,600 1,300 U 21300 710 U 1420 2,800 21,300 2,130 20 U 1,00 Totalexense. 172,970 5.480 U 167490 4290 U 163200 Net opeaing home. $ 21.30 $9.280 U $30510 $13.710 F $ 16,800
Critiquing a Report; Preparing a Performance Budget
Exchange Corp. is a company that acts as a facilitator in tax-favored real estate swaps: Such swaps, know as 1031 exchanges, permit participants to avoid some or all of the
Note that the revenues and costs in the above report are unit revenues and costs. For example, the average office expense is $135 per exchange completed on the planning budget; whereas, the average actual office expanse is $112 per exchange completed.
Legal and search fees is a variable cost; In the planning budget, the fixed component of office expenses was $5,200.
All of the company’s revenues come from fees collected when an exchange is completed.
Required:
1. Evaluate the report prepared by the bookkeeper
2. Using Exhibit 9–8 as your guide, prepare a performance report that would help the owner/manager assess the performance of the company in May.
3. Using the report you created, evaluate the performance of the company in May.
Exhibit 9–8 Performance Report Combining Activity Variances with Revenue and Spending Variances
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