Question

Problem 9-24 (Algo) Critiquing a Report; Preparing a Performance Budget (LO9-1, LO9-2, LO9-3, LO9-4, LO9-6] 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: Exchange Corp. Analysis of Revenues and Costs For the Month Ended May 31 Planning Budget Actual Unit Unit Revenues Revenues and and Costs Costs Variances Exchanges completed 30 25 $ 580 $ 670 $90 U Revenue Expenses: Legal and search fees Office expenses Equipment depreciation Rent Insurance Total expense Net operating income 215 245 30 90 18 598 72 18 U 28 F 5F 15 F 3F 33 F $57 U 15 565 15 $ $

Answer 1

Exchange Corp Flexible Budget Performance Report For the Month Ended May 31 Revenue and Actual Spending Results Variances 30 Flexible Budget Activity Variances Planning Budget Exchanges completed (9) 30 25 $17.400 $2,700 U $20,100 $3,350 F $16.750 Revenue ($6709) Expenses: Legal and search fees ($2159) Office expenses Equipment depreciation ($750) Rent ($2,250) Insurance ($450) Total expense $6.990 $6,510 $750 $2,250 $450 $16.950 $540 U $130 U $0 None $0 None SO None $670 U $6,450 $6,380 $750 $2,250 $450 $16,280 $1,075 U $255 U SO None SO None SO None $1,330 U $5,375 $6.125 $750 $2.250 $450 $14.950 Net Operating Income $450 $3,370 U $3.820 $2.020 F $1,800 Workings: Actual Results ($217 * 30) Flexible Budget ($4,850 + ((($245 - (4,850/25)) * 30)] Planning Budget [$4,850 + ((($245 - (4,850/25) * 25)] $6,510 $6,380 $6.125