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[The following information applies to the questions displayed below.] Phoenix Management helps rental property owners find renters and charges the owners one-half of the first

[The following information applies to the questions displayed below.]

Phoenix Management helps rental property owners find renters and charges the owners one-half of the first months rent for this service. For August 2019, Phoenix expects to find renters for 100 apartments with an average first months rent of $880. Budgeted cost data per tenant application for 2019 follow:

  • Professional labor: 1.5 hours at $20.00 per hour
  • Credit checks: $59.00

Phoenix expects other costs, including the lease payment for the building, secretarial help, and utilities, to be $3,900 per month. On average, Phoenix is successful in placing one tenant for every three applicants.

Actual rental applications in August 2019 were 270. Phoenix paid $8,900 for 400 hours of professional labor. Credit checks went up to $64 per application. Other costs in August 2019 (lease, secretarial help, and utilities) were $4,500. The average first monthly rentals for August 2019 were $980 per apartment unit for 90 units.

Required:

1. (a) What is the total operating income variance for August 2019? (b) What is the total flexible-budget variance for the month? (c) What is the sales volume variance for the month?

2. Determine the professional labor rate and labor efficiency variances for August 2019.

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