SHU & SHU Financing is a start-up that aims to use the power of social communities to transform the student loan market. SHU & SHU Financing revenue model is to take an upfront fee of 30 basis point (0.30% each from the alumni investor and the student borrow for every loan originated on its platform). SHU & SHU Financing hopes to go public in the near future and is keen to ensure that its financial results are in line with that ambition SHU & SHU Financing budgeted and actual results for the third quarter of 20XX are presented below.

Actual Budgeted

New Loans Originated: 4,100 5,000

Average amount of Loan: $200,000 $160,000

Variable costs per loan:

Professional labor $300 (5 hrs at $60) $400 (8 hrs at $50)

Credit verification $100 $120

Federal Documentation Fee $120 $100

Courier services $50 $55

Fixed costs:

Administrative costs $800,000 $600,000

Technology costs $1,500,000 $1,000,000

Required:

1. Prepare contribution margin income statement for actual results, statistic budget and flexible budget.

2. Calculate static budget variance, flexible budget variance and sales volume variance.

3. Analyze and discuss static budget variance, flexible budget variance and sales volume variance