Exercise 17-31 Sales Activity Variance, Service Organization (LO 17-5)

(PLEASE INCLUDE STEP BY STEP CALCULATIONS)

K&B is a small management consulting firm. Last month, the firm billed fewer hours than expected, and, as expected, profits were lower than anticipated.

	Reported Income Statement				Master Budget
Billable hoursa			11,500			10,000
Revenue		$	1,275,000		$	1,250,000
Professional salaries (all variable)			680,000			630,000
Other variable costs (e.g., supplies, computer services)			180,000			170,000
Fixed costs			285,000			300,000
Profit		$	130,000		$	150,000

^aThese are hours billed to clients. They are fewer than the number of hours worked because there is nonbillable time (e.g., slack periods, time in training sessions) and because some time worked for clients is not charged to them.

Required:

Prepare a sales activity variance analysis. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

value 0.71 points Exercise 17-31 Sales Activity Variance, Service Organization (LO 17-5) K&B is a small management consulting firm. Last month, the firm billed fewer hours than expected, and, as expected, profits were lower than anticipated. Reported Income Master Budget Statement 11,500 $1,275,000 680,000 180,000 285,000 S 130,000 10,000 $1,250,000 630,000 170,000 300,000 $ 150,000 Billable hoursa Revenue Professional salaries (all variable) Other variable costs (e.g., supplies, computer services) Fixed costs Profit "These are hours billed to clients. They are fewer than the number of hours worked because there is nonbillable time (e.g., slack periods, time in training sessions) and because some time worked for clients is not charged to them Required Prepare a sales activity variance analysis. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Flexible Budget Sales Activity Variance Master Budget Revenue Costs Professional salaries Other variable costs Fixed costs Total costs Profit