Coast Finance helps prospective homeowners of substantial means to find low-cost financing and assists existing homeowners in refinancing their current loans at lower interest rates. Coast works only for customers with excellent borrowing capacity. Hence, Coast is able to obtain a loan for every customer with whom it decides to work.

Coast charges clients 0.5% of the loan amount it arranges. In 2013, the average loan amount per customer was $238,800. In 2014, the average loan amount was $240,252. In its 2015 flexible-budgeting system, Coast assumes the average loan amount will be $240,000. Budgeted cost data per loan application for 2015 are:

• Professional labour: 6 budgeted hours at a budgeted rate of $48 per hour

• Loan filing fees: budgeted at $120 per loan application

• Creditworthiness checks: budgeted at $144 per loan application

• Courier mailings: budgeted at $60 per loan application

Office support (the costs of leases, administrative staff, and others) is budgeted to be $37,200 per month. Coast Finance views this amount as a fixed cost.

Required

1. Prepare a static budget for November 2015 assuming 90 loan applications.

2. Actual loan applications in November 2015 were 120. Other actual data for November 2015 were:

• Professional labour: 7.2 hours per loan application at $50.40 per hour

• Loan filing fees: $120 per loan application

• Creditworthiness checks: $150 per loan application

• Courier mailings: $64.80 per loan application

Office support costs for November 2015 were $40,200. The average loan amount for November

2015 was $268,800. Coast received its 0.5% fee on all loans. Prepare a Level 2 variance analysis of Coast Finance for November 2015. Coast's output measure in its flexible-budgeting system is the number of loan applications.