K8B Is a small management consultng fm. Last month, the firm billed fewer hours

Question

K8B Is a small management consultng fm. Last month, the firm billed fewer hours than expected, and, as epected, pronts were lcwer than anticlpated Repoited IncoTne StatemertMlester Bucget 11,500 Revanue Professicnal salaes a variable Othr aiable costs (e.g., supplies, computer sarvces) 10,000 $1.285,000 1 250,000 G55,000 70,000 710,000 100,000 290,000 S105,000 Fixed cost:s Proit S 125,000 These are hours billed to clients They are lewer than tne number of hours wnrked because tere is nonb llable time (eg, sak penods, time in training sessions and bexause some time worked tor clients is not charged to them Required: Prepare a sales acter y variance analysis Do not round intermediate calculations. Indicate the effect of each variance by selecting F for favorable or U for unfavorable. If there no-ffect, do not select either option. Flexihle Rurdget Sales Activity Variance Master Rurlget Rusenuc Costs Picfessicral salaies Fined rnsts Total cos. Prcfit

Explanation / Answer

Flexible budget Sales activity variance Master budget Revenue 1437500 187500 F 1250000 Costs: Professional salaries 753250 98250 U 655000 Other variable costs 195500 25500 U 170000 Fixed costs 300000 0 300000 Total costs 1248750 123750 U 1125000 Profit 188750 63750 F 125000

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