M Galler Tax Services specializes in preparing individual tax returns. Revenue is earned from completed returns for all clients. Direct labour for part-time preparers is the primary cost of the company. Roy Galler, the owner, has received the following performance report for the current year: 1 2 3 4 Galler Tax Services Performance Report For the Year Ended June 30, 2021 5 6 Actual 500 $ 101,910 Budget 540 $109,350 Variances 40 U $7,440 U 7 8 Number of returns 9 Service fees 10 Variable costs: Direct labour 12 Supplies 13 Utilities Training 15 Overhead 16 Total variable costs 17 Contribution margin 18 Fixed overhead 19 Operating income (loss) 20 54,820 1,830 4,750 4,090 32,550 98,040 3,870 3,100 $770 58,455 2,025 5,940 4,590 35,100 106,110 3,240 2,500 $740 3,635 F 195 F 1,190 F 500 F 2,550 F 8,070 F 630 F 600 U $30 F Required: 1. is the original performance report useful? Why or why not? (2 marks) Useful Reason 2. Prepare a performance report using the flexible budget approach. (11 marks) Note: You may not need to use all the blue and green hightlighted cells. Galler Tax Services Flexible Budget Performance Report For the Year Ended June 30, 2021 Per return Actual Budget Variances Number of resales Total selling fees Variable costs: Direct labour Supplies Utilities Training Overhead Total variable costs 33 34 Galler Tax Services Flexible Budget Performance Report For the Year Ended June 30, 2021 35 36 37 Per return Actual Budget Variances 38 Number of resales 39 Total selling fees 40 Variable costs: Direct labour 42 Supplies 43 Utilities Training 35 Overhead 6 Total variable costs 27 Contribution margin ES Fixed overhead =9 Operating income (loss) 50 51 3. Based on the performance report in part 2, does Galler need to be concerned? Why or why not? (2 marks) 2 3 Concerned 54 65 Reason -6 7 8 9