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

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Chapter1: Financial Statements And Business Decisions
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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 capital gains taxes that would otherwise be due. The bookkeeper for the company has been asked to prepare a report for the company to help its owner/manager analyze performance. The first such report appears below:

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

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
....
Transcribed Image Text: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
Transcribed Image Text: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
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