Facilitator Corp. is a company that acts as a facilitator in tax-favored real estate swaps. Such swaps, known 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:

Facilitator Corp Analysis of Revenues and Costs For the Month Ended May 31
	Planning Budget Unit Revenues and Costs			Actual Unit Revenues and Costs			Variances
Exchanges completed		20			25
Revenue	$	550		$	500		$	50	U
Expenses:
Legal and search fees		155			161			6	U
Office expenses		209			172			37	F
Equipment depreciation		30			24			6	F
Rent		75			60			15	F
Insurance		15			12			3	F
Total expense		484			429			55	F
Net operating income	$	66		$	71		$	5	F

Note that the revenues and costs in the above report are unit revenues and costs. For example, the average office expense is $209 per exchange completed on the planning budget; whereas, the average actual office expense is $172 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 $4,100.

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
	No

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.e., zero variance). Input all amounts as positive values.)

Facilitator CorpFlexible Budget Performance ReportFor the Month Ended May 31Planning BudgetActivity VariancesFlexible BudgetSpending VariancesActual ResultsExchanges completed202525Revenue$12,500Expenses:Legal and search fees4,025Office expenses4,300Equipment depreciation600Rent1,500Insurance300Total expense10,725Net operating income$1,775

Please see the attached image for the performance report.

Note that the revenues and costs in the above report are unit revenues and costs. For example, the average office expense is $209 per exchange completed on the planning budget: whereas, the average actual office expense is $172 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 $4,100. All of the company's revenues come from fees collected when an exchange is completed. 1. Is the report prepared by the bookkeeper useful as a performance report? 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.e., zero variance). Input all amounts as positive values.)