QUESTION 3 (25 MARKS) 4 Quinn Property is a company that acts as a facilitator in tax-favored real estate swaps. Such swaps, known as 1031 exchanges, permits participants to avoid some or all of the capital gains taxes that would otherwise be due. The bookkeeper has been asked to prepare a report for the company to help its manager analyze performance. The first such report appears below: Analysis of Revenues and Costs of Quinn Property For the Month Ended 30 September Planning Budget Actual Variances Unit Revenues & Costs Unit Revenues & Costs Exchange completed 40 50 RM RM RM Revenues 395 385 10 U Expenses: Legal and search fees 165 184 19 U Office Expenses 135 112 23 F Equipment depreciation 10 8 2 F Rent 45 36 9F Insurance 5 IF Total expense 360 344 16 F Net Operating Expense 35 41 6F The revenue and cost in the above report are unit revenues and costs. For example, the average of office expense is RM135 per exchange completed on the planning budget; whereas, the average actual office expense is RM112 per exchange completed. Legal and search fees is a variable cost; office expenses is a mixed cost; and equipment depreciation, rent, and insurance are fixed costs. In the planning budget, the fixed component of office expenses was RM5,200. All of the company's revenues come from the fees collected when an exchange is completed. Required: a) Explain the importance of flexible budgets in performance management. (4 marks) (CLO2:PLO2:C3) b) Prepare a flexible budget performance report to assess the performance of the company. (16 marks) (CLO2:PLO2:C5) c) Evaluate the performance of the company based on the report you created above. (5 marks) (CLO2:PLO2:05)