Question
[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 $960. Budgeted cost data per tenant application for 2019 follow:
- Professional labor: 1.5 hours at $20.00 per hour
- Credit checks: $64.00
Phoenix expects other costs, including the lease payment for the building, secretarial help, and utilities, to be $4,400 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 $8,500 for 390 hours of professional labor. Credit checks went up to $69 per application. Other costs in August 2019 (lease, secretarial help, and utilities) were $5,000. The average first monthly rentals for August 2019 were $1,080 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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