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Business
Accounting
Static Budget Actual Results New loans originated 8,000 11,040 Average amount of loan 2$ 152,000 $173,000 Variable costs per loan Professional labor 2$ 539 (11 hrs at $49 per hour) 2$ 684 (12 hrs at $57 per hour) Credit verification 2$ 95 2$ 95 Federal documentation fees $ 140 2$ 143 Courier services 2$ 75 2$ 79 Administrative costs (fixed) 2$ 750,000 $ 874,000 Technology costs (fixed) $ 940,000 $ 1,050,000 %24

Static Budget Actual Results New loans originated 8,000 11,040 Average amount of loan 2$ 152,000 $173,000 Variable costs per loan Professional labor 2$ 539 (11 hrs at $49 per hour) 2$ 684 (12 hrs at $57 per hour) Credit verification 2$ 95 2$ 95 Federal documentation fees $ 140 2$ 143 Courier services 2$ 75 2$ 79 Administrative costs (fixed) 2$ 750,000 $ 874,000 Technology costs (fixed) $ 940,000 $ 1,050,000 %24

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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​GradFi​ is a startup that aims to use the power of social communities to transform the student loan market. It connects participants through a dedicated lending​ pool, enabling current students to borrow from a​ school's alumni community. GradFi​'s revenue model is to take an upfront fee of 60 basis points ​(0.60​%) each from the alumni investor and the student borrower for every loan originated on its platform. GradFi hopes to go public in the near future and is keen to ensure that its financial results are in line with that ambition. GradFi​'s budgeted and actual results for the third quarter of 2017 are presented below.

1. Prepare GradFi's static budget of operating income for the third quarter of 2017. 2. Prepare an analysis of variances for the third quarter of 2017; identify the sales volume and flexible budget variances for operating income. 3. Compute the professional labor price and efficiency variances for the third quarter of 2017.
Transcribed Image Text:1. Prepare GradFi's static budget of operating income for the third quarter of 2017. 2. Prepare an analysis of variances for the third quarter of 2017; identify the sales volume and flexible budget variances for operating income. 3. Compute the professional labor price and efficiency variances for the third quarter of 2017.
The data table presents a comparison between a static budget and actual results for loan origination, including both the number of loans and associated costs. **Static Budget vs. Actual Results:** - **New Loans Originated:** - Static Budget: 8,000 - Actual Results: 11,040 - **Average Amount of Loan:** - Static Budget: $152,000 - Actual Results: $173,000 - **Variable Costs Per Loan:** - **Professional Labor:** - Static Budget: $539 (calculated as 11 hours at $49 per hour) - Actual Results: $684 (calculated as 12 hours at $57 per hour) - **Credit Verification:** - Static Budget: $95 - Actual Results: $95 - **Federal Documentation Fees:** - Static Budget: $140 - Actual Results: $143 - **Courier Services:** - Static Budget: $75 - Actual Results: $79 - **Fixed Costs:** - **Administrative Costs:** - Static Budget: $750,000 - Actual Results: $874,000 - **Technology Costs:** - Static Budget: $940,000 - Actual Results: $1,050,000 This table highlights differences between the planned and actual figures, providing insights into cost variances and resource usage.
Transcribed Image Text:The data table presents a comparison between a static budget and actual results for loan origination, including both the number of loans and associated costs. **Static Budget vs. Actual Results:** - **New Loans Originated:** - Static Budget: 8,000 - Actual Results: 11,040 - **Average Amount of Loan:** - Static Budget: $152,000 - Actual Results: $173,000 - **Variable Costs Per Loan:** - **Professional Labor:** - Static Budget: $539 (calculated as 11 hours at $49 per hour) - Actual Results: $684 (calculated as 12 hours at $57 per hour) - **Credit Verification:** - Static Budget: $95 - Actual Results: $95 - **Federal Documentation Fees:** - Static Budget: $140 - Actual Results: $143 - **Courier Services:** - Static Budget: $75 - Actual Results: $79 - **Fixed Costs:** - **Administrative Costs:** - Static Budget: $750,000 - Actual Results: $874,000 - **Technology Costs:** - Static Budget: $940,000 - Actual Results: $1,050,000 This table highlights differences between the planned and actual figures, providing insights into cost variances and resource usage.
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