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Kentford Associates is a small professional services firm. Last month, Kentford billed more hours than expected and profits reflected this. Billable hoursa Revenue Professional salaries (all variable) Other variable costs (e.g., supplies, computer services) Fixed costs Profit Reported Income Statement 5,829 $ 1,172,000 524,000 170,400 260,000 $ 217,600 Master Budget 5,424 $ 1,128,000 512,000 152,000 287,000 $ 177,000 *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.

Kentford Associates is a small professional services firm. Last month, Kentford billed more hours than expected and profits reflected this. Billable hoursa Revenue Professional salaries (all variable) Other variable costs (e.g., supplies, computer services) Fixed costs Profit Reported Income Statement 5,829 $ 1,172,000 524,000 170,400 260,000 $ 217,600 Master Budget 5,424 $ 1,128,000 512,000 152,000 287,000 $ 177,000 *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.

FINANCIAL ACCOUNTING
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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Kentford Associates is a small professional services firm. Last month, Kentford billed more hours than expected and profits reflected this. Billable hoursa Revenue Professional salaries (all variable) Other variable costs (e.g., supplies, computer services) Fixed costs Profit Revenue Professional salaries Other variable costs Fixed costs Profit *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. Actual (5,829 hours) $ 1,172,000 Reported Income Statement Required: Prepare a profit variance analysis for Kentford Associates. Note: 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. 524,000 170,400 260,000 $ 217,600 Cost Variances 5,829 $ 1,172,000 524,000 170,400 260,000 $ 217,600 Price Variances Master Budget 5,424 $ 1,128,000 512,000 152,000 287,000 $ 177,000 Flexible Budget (5,829 hours) $ Sales Activity Variance Master Budget (5,424 hours) $ 1,128,000 $ 512,000 152,000 287,000 177,000
Transcribed Image Text:Kentford Associates is a small professional services firm. Last month, Kentford billed more hours than expected and profits reflected this. Billable hoursa Revenue Professional salaries (all variable) Other variable costs (e.g., supplies, computer services) Fixed costs Profit Revenue Professional salaries Other variable costs Fixed costs Profit *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. Actual (5,829 hours) $ 1,172,000 Reported Income Statement Required: Prepare a profit variance analysis for Kentford Associates. Note: 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. 524,000 170,400 260,000 $ 217,600 Cost Variances 5,829 $ 1,172,000 524,000 170,400 260,000 $ 217,600 Price Variances Master Budget 5,424 $ 1,128,000 512,000 152,000 287,000 $ 177,000 Flexible Budget (5,829 hours) $ Sales Activity Variance Master Budget (5,424 hours) $ 1,128,000 $ 512,000 152,000 287,000 177,000
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