1. Following are the revenue and cost estimates used by Mac's Tax Service to prepare its planning budget as shown on the next page. Mac's Tax Service - Budget Report Estimated returns to be prepared Estimated average fee per return 1,000 150 Planning Budget at 1,000 Returns Flexible Budget at 1,040 Returns Actual Performance Spending Variance FIU $ 5.00 $ 50 Revenue $150,000 $150,800 Variable Expenses (per return) Supplies Copier Expenses Mixed Expenses Software License Fees - Fixed Software License Fees - Variable (per return) Supplies 5,000 5,100 $ 3,000 $10.00 Copier Expenses 500 625 Software License 13,000 13,140 Fixed Expenses (Annual Cost) Depreciation Rent Property Taxes Office Salaries $10,000 12,000 1,000 36,000 Depreciation 10,000 10,000 Rent 12,000 12,000 Property Taxes 1,000 1,200 Required: a. During the year, Mac's actually prepared 1,040 returns. Complete the flexible budget column for 1,040 returns on the next page. Salaries 36,000 38,000 Total Expenses 77,500 80,065 b. Calculate the variances between the flexible budget amounts and the actual amounts as shown in that column. Enter the variances in the variance column and indicate whether the variances are favorable or unfavorable. Net Income 72,500 70,735