Dylan & Father operate a tax accounting practice with partners and staff members
ID: 2484174 • Letter: D
Question
Dylan & Father operate a tax accounting practice with partners and staff members. Each billable hour of partner time has a $590 budgeted price and $290 budgeted variable cost. Each billable hour of staff time has a budgeted price of $130 and a budgeted variable cost of $70. This month, the partnership budget called for 8,800 billable partner-hours and 35,700 staff-hours. Actual results were as follows:
Partner revenue $ 4,787,000 8,300 hours
Staff revenue $ 4,575,000 35,000 hours
Required:
(a) Compute the sales price variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
(b) Compute the total sales activity variance. (Indicate the effect of the variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations. Round your answer to the nearest dollar amount.)
(c) Compute the total sales mix variance. (Indicate the effect of the variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations. Round your answer to the nearest dollar amount.)
(d) Compute the total sales quantity variance. (Indicate the effect of the variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations. Round your answer to the nearest dollar amount.)
Explanation / Answer
sales price variance Standared rate* Actula Hour Partner revenue 8300*590 4897000 Staff revenue 35000*130 4550000 Total 9447000 Actual Revenue Partner revenue 4787000 Staff revenue 4575000 Total 9362000 sales price variance 9447000-936000 85000 unfavorable sales activity variance Standared rate* Standard Hour Partner revenue 8800*(590-290) 2640000 Staff revenue 35700*(130-70) 2142000 Total 4782000 Standared rate* Actual Hour Partner revenue 8300*(590-290) 2490000 Staff revenue 35000*(130-70) 2100000 Total 4590000 sales activity variance 4782000-4590000 192000 unfavorable Total sales mix variance Mix Ratio Partner revenue 8800 19.78% Staff revenue 35700 80.22% 44500 Actual Hour Mix Ratio Stadared Mix*43300 Partner revenue 8300 19.78% 8563 Staff revenue 35000 80.22% 34737 43300 43300 Standared rate* Actual Hour Partner revenue 8300*(590-290) 2490000 Staff revenue 35000*(130-70) 2100000 Total 4590000 Standard rate* Standard Mix hour Partner revenue 8563*(590-290) 2568900 Staff revenue 34737*(130-70) 2084220 Total 4653120 Total sales mix variance 459000-4653120 63120 unfavorable sales quantity variance Standard rate* Standard Mix hour Partner revenue 8563*(590-290) 2568900 Staff revenue 34737*(130-70) 2084220 Total 4653120 Standared rate* Standard Hour Partner revenue 8800*(590-290) 3168000 Staff revenue 35700*(130-70) 2142000 Total 5310000 Sales Quantity Variance 5310000-4653120 656880 unfavorable Standard Hour* Standard Rate Partner revenue 8800*590 5192000 Staff revenue 35700*130 4641000 Total 9833000 Standard rate* Actual Hour Partner revenue 8300*590 4897000 Staff revenue 35000*130 4550000 Total 9447000 sales price variance 9833000-9447000 386000 unfavorable
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