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Fougere Realtors, Inc., specializes in home re - sales. It earns revenue from selling fees. Fougere Realtors' major costs are commissions for salespersons, listing agents,

Fougere Realtors, Inc., specializes in home re-sales. It earns revenue from selling fees. Fougere Realtors' major costs are commissions for salespersons, listing agents, and listing companies. Its business has improved steadily over the last ten years. As usual, Chris Fougere, the managing partner of Fougere Realtors, Inc., received a report summarizing the performance for the most recent year.
Fougere Realtors, Inc.
Performance Report
For the year ended December 31,2019
Budget Actual Variance
Number of home re-sales 18020020 F
Variable expenses
Sales commissions $1,000,000 $1,200,000 $200,000 U
Automobile 40,00040,0000
Advertising 172,020190,00017,980 U
General overhead 700,000700,0000 U
Total $1,912,020 $2,130,000 $217,980 U
Fixed expenses
General overhead 60,00062,3002,300 U
Total expenses $1,972,020 $2,192,300 $220,280 U
Required:
a) Explain the major weakness of the performance report.
b) Explain clearly why all the variances for the variable expenses are unfavourable (U).
c) As a first step in helping Chris Fougere to evaluate cost/expense control in the organization, complete the following for the year ended December 31,2019, assuming the only cost driver is the number of home re-sales. (Note: Indicate any variance as either favourable (F) or unfavourable (U).)
Budget Actual Variance
Number of home re-sales 2022020
Variable expenses
Sales commissions $_____ $1,205,183 $_____
Automobile $_____39,560 $_____
Advertising $_____192,690 $_____
General overhead $_____716,970 $_____
Total $_____ $2,154,403 $_____
Fixed expenses
General overhead $_____62,300 $_____

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