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:

Problem 10-23 Critiquing a Report: Preparing a Performance Budget CLO10-1, LO10-4, LO10-6] 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 Unit Unit Revenues Revenues and Costs and Costs Variances Exchanges completed 25 20 $570 $610 40 U Expenses Legal and search fees 97 85 2 U Office expenses 90 227 37 F Equipment depreciation 24 30 6 F Rent 5 F 60 75 3 F nsurance Total expense 483 532 49 F 87 78 9 F Net operating income Note that the revenues and costs in the above report are unit revenues and costs. For example, the average office expense is S227 per exchange completed on the planning budget, whereas, the average actual office expense is $190 per exchange completed. and search fees is a variable cost is a cost and equipment depreciation, rent, and insurance are fixed costs. In the planning budget, the fixed component of office expenses was $4400. 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? Yes 2. Complete a performance report that would help the owner/manager assess the performance of the company in May. (Indicate the effect of each variance by selecting "F" for favorable,"U" for unfavorable, and "None" for no effect (i.ee., zero variance). Input all amounts as positive values.)