Knowledge Finance (KnowFi) is a startup that aims to use the power of social communities to transform the student loan market. It connects participants through a dedicated lending pool, enabling current students to borrow from a school's alumni community. Know Fi's revenue model is to take an upfront fee of 60 basis points (0.60%) each from the alumni investor and the student borrower for every loan originated on its platform. KnowFi hopes to go public in the near future and is keen to ensure that its financial results are in line with that ambition. KnowFi's budgeted and actual results for the third quarter of 2017 are presented below. (Click the icon to view the data.) Read the requirements. Requirement 1. Prepare KnowFi's static budget of operating income for the third quarter of 2017. (Do not round intermediary calculations. Round the amount you enter into the input cell to the nearest whole dollar.) Knowledge Finance Data Table Static Budget 2017 Loans Static Budget Actual Results Revenues New loans originated 7,900 10.920 Variable costs: Average amount of loan $ 151,000 $173,000 Professional labor Variable costs per loan (7 hrs at $38 per (11 hrs at $44 Credit verification Professional labor $ 266 hour) 484 per hour) Federal doc fees Credit verification $ 100 100 Courier services Federal documentation fees 140 143 Total variable costs Courier services $ 37 Contribution margin Administrative costs (fixed) $ 840,000 S 976,000 Fixed administrative costs Technology costs (fixed) $ 1,500,000 $ 1,609,000 Fixed technology costs Operating income Print Done 35 Requirement 1. Prepare KnowFi's static budget of operating income for the third quarter of 2017. 2. Prepare an analysis of variances for the third quarter of 2017: identify the sales volume and flexible budget variances for operating income. 3. Compute the professional labor price and efficiency variances for the third quarter of 2017. 4. What factors would you consider in evaluating the effectiveness of professional labor in the third quarter of 2017? Print Done Knowledge Finance (KnowFi) is a startup that aims to use the power of social communities to transform the student loan market. It connects participants through a dedicated lending pool, enabling current students to borrow from a school's alumni community. Know Fi's revenue model is to take an upfront fee of 60 basis points (0.60%) each from the alumni investor and the student borrower for every loan originated on its platform. KnowFi hopes to go public in the near future and is keen to ensure that its financial results are in line with that ambition. KnowFi's budgeted and actual results for the third quarter of 2017 are presented below. (Click the icon to view the data.) Read the requirements. Requirement 1. Prepare KnowFi's static budget of operating income for the third quarter of 2017. (Do not round intermediary calculations. Round the amount you enter into the input cell to the nearest whole dollar.) Knowledge Finance Data Table Static Budget 2017 Loans Static Budget Actual Results Revenues New loans originated 7,900 10.920 Variable costs: Average amount of loan $ 151,000 $173,000 Professional labor Variable costs per loan (7 hrs at $38 per (11 hrs at $44 Credit verification Professional labor $ 266 hour) 484 per hour) Federal doc fees Credit verification $ 100 100 Courier services Federal documentation fees 140 143 Total variable costs Courier services $ 37 Contribution margin Administrative costs (fixed) $ 840,000 S 976,000 Fixed administrative costs Technology costs (fixed) $ 1,500,000 $ 1,609,000 Fixed technology costs Operating income Print Done 35 Requirement 1. Prepare KnowFi's static budget of operating income for the third quarter of 2017. 2. Prepare an analysis of variances for the third quarter of 2017: identify the sales volume and flexible budget variances for operating income. 3. Compute the professional labor price and efficiency variances for the third quarter of 2017. 4. What factors would you consider in evaluating the effectiveness of professional labor in the third quarter of 2017? Print Done