K&B; is a small management consulting firm. Last month, the firm billed fewer ho

Question

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. Master Reported Income Statement Billable hoursa Revenue Professional salaries (all variable) Other variable costs (e.g., supplies, computer services) Fixed costs 9,750 S 825,000 407,500 121,500 203,000 S 93,000 7,350 685,000 347,500 99,500 212,500 S 25,500 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. Required Prepare a profit variance analysis for K&B.; (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable· lf there is no effect, do not select either option.) Master Flexible Budget Sales Activity Variance Actual Cost Variances Price Variances Budget 750 hrs Revenue Professional salaries Other variable costs Fixed costs (7,350 hrs.) 685,000 347,500 99.500 212,500 S 25,500 $ 825,000 407,500 121,500 203,000 Profit $93,000

Explanation / Answer

7350 Actual (7350 hrs) Cost Var Price Var Flexible Budget Sales Activity Var Master Budget(9750 hrs) 9750 Per Unit 93.19728 Rev 685000 -83673.5 F 908673.4694 223673.5 U 825000 84.61538 Per Unit Per Unit 47.27891 Prof Salaries 347500 -53469.4 U 460969.3878 113469.4 F 407500 41.79487 Per Unit Per Unit 13.53741 Other Var cost 99500 -10489.8 U 131989.7959 32489.8 F 121500 12.46154 Per Unit Fixed costs 212500 -9500 U 203000 0 203000 20.82051 Profit 25500 -73459.2 U -83673.5 F 77714.29 U 93000 67500

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.