Exercise 17-34 (Static) Sales Activity Variance, Service Organization (LO 17-6)K&B is a small management consulting firm. Last month, the firm billed fewer hours than expected, and, as expected, profits were lower than anticipated. Reported Income StatementMaster BudgetBillable hoursa 7,200 9,000 Revenue $670,000 $810,000 Professional salaries (all variable) 340,000 400,000 Other variable costs (e.g., supplies, computer services) 98,000 120,000 Fixed costs 205,000 200,000 Profit $27,000 $90,000 aThese are hours billed to clients. They are fewer than the number of hours worked because there is nonbillable time (e.g., slack periods, time in training sessions) and because some time worked for clients is not charged to them. Required:Prepare a sales activity variance analysis. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Sales activity variance analysis: Sales activity variance analysis is the resultant sales activity…

Answered: K&B is a small management consulting…

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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Exercise 17-34 (Static) Sales Activity Variance, Service Organization (LO 17-6)

K&B is a small management consulting firm. Last month, the firm billed fewer hours than expected, and, as expected, profits were lower than anticipated.

	Reported Income Statement	Master Budget
Billable hours^a			7,200		9,000
Revenue		$	670,000	$	810,000
Professional salaries (all variable)			340,000		400,000
Other variable costs (e.g., supplies, computer services)			98,000		120,000
Fixed costs			205,000		200,000
Profit		$	27,000	$	90,000

^aThese are hours billed to clients. They are fewer than the number of hours worked because there is nonbillable time (e.g., slack periods, time in training sessions) and because some time worked for clients is not charged to them.

Required:

Prepare a sales activity variance analysis. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

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