Reliant is a facilities management company with operations across the country. The owners of office buildings contract Reliant to perform all maintenance functions for their buildings. Tenants in office buildings phone Reliant when a service problem arises such as a malfunctioning elevator, a burned-out light, or a broken furnace. Reliant dispatches a service team to address the problem and charges the property owner for the service call. The number of service calls received by Reliant fluctuates over the year: calls peak during the summer months and decline toward the Christmas holidays. Reliant guarantees that service issues will be addressed within 3 hours of a tenant phoning in about a problem. This policy has given Reliant an edge over its competition.

Some service jobs take more time than others. At the start of each year, Reliant creates an annual budget for revenues, direct expenses, and fixed costs. Variances are calculated between actual results and budget on a monthly basis.

In December, Reliant received and responded to 10,000 service requests. It billed clients at an average rate of $100 per service call. Decembers budget called for 15,000 service requests to be processed at an average rate of $110 per job. The monthly budget figures reflect annual figures divided by 12.

For each service job, Reliant budgets 2 hours of direct labour at $25 per hour. In December, Reliant actually incurred 25,000 hours of labour at $30 per hour.

For December, Reliant budgeted for fixed overhead of $100,000. Monthly budget figures for fixed overhead reflect annual figures divided by 12. Fixed overhead includes such expenses as heating and electricity at Reliants head office, and maintenance on Reliants service equipment (which is usually carried out in December). Actual overhead expenses incurred for December were $125,000.

Ms. Daniels is the general manager of Reliants operations. When she was hired in November, the president instructed her to run a tight ship cost overruns from budget must be eliminated in any way possible, including by downsizing our service staff. Ms. Daniels is a little apprehensive because early indications are that December was not a great month for Reliant. However, she is not quite sure whether Reliants results actually reflect reality. She is also uncertain about which performance variances she ought to be held accountable for. She has hired you to calculate variances from budget and help her analyze them.

Calculate variances from the budget and help analyze them.