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

Exchanges completed

planning

Budget

Actual

Unit

Unit

Revenues

Revenues and and Costs

Costs Variances

30

25

Revenue

Expenses:

Legal and search fees

Office expenses

Equipment depreciation

Rent

Insurance

Total expense

Net operating income

$ 600

$ 680

$80 U

239

219

25

75

15

573

5127

220

248

30

90

18

606

$

74

19 U

29 F

5 F

15 F

3B F

$47 U

Help

Save & E,

Note that the revenues and costs in the above report are unit revenues and costs. For example, the average office expense is $248 per exchange completed on the planning budget, whereas, the average actual office expense is $219 per exchange completed

Legal and search fees is a variable cost, office expenses is a mixed cost, and equipment depreciation, rent, and insurance are fixed costs. In the planning budget, the fixed component of office expenses was $4,900.

All of the company's revenues come from fees collected when an exchange is completed.

Required:

1. Is the report prepared by the bookkeeper useful as a performance report?

2. Complete the performance report that would help the owner/manager assess the performance of the company in May.

Complete this question by entering your answers in the tabs below.

Required 1

Required 2

Is the report prepared by the bookkeeper useful as a performance report?

OYes

ONo