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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.
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 hours Revenue Professional salaries (all variable) 12,000 10,000 $1,335,000 $1,300,000 690,000 630,000 Other variable costs (e.g., supplies, computer services) Fixed costs 190,000 290,000 180,000 300,000 Profit $ 165,000 $ 190,000 *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.) Revenue Costs: Professional salaries Other variable costs Fixed costs Profit Total costs Flexible Budget 12,000 hours) Master Budget (based on actual of Sales Activity Variance (based on budgeted 10,000 hours)
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