Springfield Bank originates mortgage loans for residential housing. The company

Question

Springfield Bank originates mortgage loans for residential housing. The company charges a service fee for processing loan applications. This fee is set twice a year based on the cost of processing a loan application. For the first half of this year, the bank estimated that it would process 230 loans. Correspondence, credit reports, supplies, and other materials that vary with each loan are estimated to cost dollar60.50 per loan. The company hires a loan processor at an estimated cost of dollar85,000 per year and an assistant at an estimated cost of dollar55,000 per year. The cost to lease office space and pay utilities and other related costs is estimated to be dollar139,000 per year. During the first six months of this year, Springfield Bank processed 250 loans. Cost of materials, credit reports, and other items related to loan processing were 12 percent higher than expected for the volume of loans processed. The loan processor and her assistant cost dollar70,500 for the six months. Leasing and related office costs were dollar65,500 for the six months. Required: Compute the variances for Springfield Bank. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.)

Explanation / Answer

Springfield Bank All Amounts in $ Correspondence and Other Costs =230 loans X $ 60.50 = 13915 Cost to lease office space and other related costs for six months 69500 Total 83415 Add : 12% Increase 10010 Budgeted Costs 93425 Actual Costs incurred 65500 Variance 27925 Favorable Salaries and Other Costs Budgeted Costs for six months 70000 Add : 12% Increase 8400 Total Budgeted Salary Costs 78400 Actual Salary Costs 70500 Variance 7900 Favorable

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