Fougere Realtors, Inc., specializes in home re-sales. It earns revenue from selling fees. CONRAD, 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 Eugene Realtors, Inc., received a report summarizing the performance for the most recent year. Eugene Realtors, Inc. Performance Report For the year ended December 31, 2007 Budget Actual Variance Number of home re-sales 180 202 22 F Variable expenses Sales commissions $1, 102,950 $1,205,183 $102,233 U Automobile 36,000 39,560 3,560 U Advertising 171,000 192,690 21,690 U General overhead 656,100 716,970 60,870 U Total $1,966,050 $2,154,403 $188,353 U Fixed expenses General overhead 60 000 62.300 2.300 U Total expenses $2.026.050 $2.216.703 $190.653 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 Fougets to evaluate cost/expense control in the organization, complete the following for the year ended December 31, 2007, 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 Variable expenses Sales commissions Automobile CTB 329 - Management Accounting I: Foundations 6 Advertising General overhead Total Fixed expenses General overhead LE