This paper circulates around the core theme of Explain the major weakness of this performance report and why all the variances for the variable expenses are unfavourable (U) together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Fougere Realtors, Inc. specializes in
home re-sales. It earns revenue from selling fees. Fougere Realtors’
major costs are commissions for salespersons, listing agents, and listing
companies. Its business has improved steadily over the last ten years. As
usual, Chris Fougere, the managing partner of Fougere Realtors, Inc., received
a report summarizing the performance for the most recent year.
Fougere Realtors, Inc.
Performance Report
For the year ended December 31, 2007
Budget
Actual Variance
Number of home
re-sales
180
202
22 F
Variable expenses
Sales
commissions
$1,102,950
$1,205,183 $102,233 U
Automobile
36,000
39,560 3,560 U
Advertising
171,000
192,690
21,690 U
General
overhead
656,100
716,970 60,870 U
Total
$1,966,050
$2,154,403 $188,353 U
Fixed expenses
General overhead
60,000
62,300
2,300 U
Total
expenses $2,026,050 $2,216,703 $190,653 U
Required:
a) Explain the major weakness of this performance
report and why all the variances for the variable expenses are
unfavourable (U) (5 marks)
b) As a first step in
helping Chris Fougere to evaluate cost / expense control in the organization,
complete the following for the year ended December 31, 2007, assuming the only
cost driver is the number of home re-sales. (Note: Indicate any variance
as either favourable (F) or unfavourable (U).) (15 marks)
Budget
Actual Variance
Number of home
re-sales 202
202
0
Variable expenses
Sales
commissions $
$ 1,205,183
_________
Automobile $
_________
39,560 _________
Advertising $
_________
192,690
_________
General
overhead $
_________
716,970
_________
Total $
_________
$2,154,403
_________
Fixed expenses
General
overhead $
_________
62,300
_________
Total
expenses
$ $2,216,703
