Subject: acounting K&B is a small management consulting firm. Last month, the firm billed fewer hours than expected, and, as expected, profits werelower than anticipated.Billable hoursaRevenueProfessional salaries (all variable)Other variable costs (e.g., supplies, computer services)Fixed costsProfitaThese are hours billed to clients. They are fewer than the number of hours worked because there is nonbillable time (e.g., slackperiods, time in training sessions) and because some time worked for clients is not charged to them.RevenueCosts: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.)Professional salariesOther variable costsFixed costsReported IncomeStatement11,500$1,230,000685,000170,000300,00075,000Total costsProfitMaster Budget10,000$1,200,000630,000160,000310,000$ 100,000Master BudgetFlexible Budget(based on actual of Sales Activity Variance (based on budgeted11,500 hours)10,000 hours)

Activity variances are those which are determined to show the differences between the values of…

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. Billable hoursa Revenue Professional salaries (all variable) Other variable costs (e.g., supplies, computer services) Fixed costs Profit Revenue Costs: *These 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. Professional salaries Other variable costs Fixed costs 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.) Total costs Reported Income Profit Statement 11,500 $1,230,000 685,000 170,000 300,000 $ 75,000 Flexible Budget (based on actual of 11,500 hours) Master Budget 10,000 $1,200,000 630,000 160,000 310,000 $ 100,000 Master Budget Sales Activity Variance (based on budgeted 10,000 hours)