Flexible Budgets and Operating Income Variances Phoenix Management helps rental property owners find renters and charges the owners one-half of the first month’s rent for this service.For August 2019, Phoenix expects to find renters for 100 apartments with an average first month’srent of $700. Budgeted cost data per tenant application for 2019 follow:∙ Professional labor: 1.5 hours at $20.00 per hour∙ Credit checks: $50.00Phoenix expects other costs, including the lease payment for the building, secretarial help, andutilities, to be $3,000 per month. On average, Phoenix is successful in placing one tenant for everythree applicants.Actual rental applications in August 2019 were 270. Phoenix paid $9,500 for 400 hours of professional labor. Credit checks went up to $55 per application. Other costs in August 2019 (lease,secretarial help, and utilities) were $3,600. The average first monthly rentals for August 2019 were$800 per apartment unit for 90 units.[LO 14-3, 14-5][LO 14-2, 14-3, 14-6]Final PDF to printerblo17029_ch14_569-620.indd 615 02/19/18 09:09 AMChapter 14 Operational Performance Measurement: Sales, Direct Cost Variances, and the Role of Nonfinancial Performance Measures 615Required1. Prepare an operating income variance report similar to text Exhibit 14.4. (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? (Round all answers to the nearest whole dollar.)2. Determine the professional labor rate and labor efficiency variances for August 2019, each rounded tothe nearest whole dollar.3. What nonfinancial factors should Phoenix consider in evaluating the effectiveness and efficiency ofprofessional labor?
Flexible Budgets and Operating Income Variances Phoenix Management helps rental property owners find renters and charges the owners one-half of the first month’s rent for this service.
For August 2019, Phoenix expects to find renters for 100 apartments with an average first month’s
rent of $700. Budgeted cost data per tenant application for 2019 follow:
∙ Professional labor: 1.5 hours at $20.00 per hour
∙ Credit checks: $50.00
Phoenix expects other costs, including the lease payment for the building, secretarial help, and
utilities, to be $3,000 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 $9,500 for 400 hours of professional labor. Credit checks went up to $55 per application. Other costs in August 2019 (lease,
secretarial help, and utilities) were $3,600. The average first monthly rentals for August 2019 were
$800 per apartment unit for 90 units.
[LO 14-3, 14-5]
[LO 14-2, 14-3, 14-6]
Final PDF to printer
blo17029_ch14_569-620.indd 615 02/19/18 09:09 AM
Chapter 14 Operational Performance Measurement: Sales, Direct Cost Variances, and the Role of Nonfinancial Performance Measures 615
Required
1. Prepare an operating income variance report similar to text Exhibit 14.4. (a) What is the total operating income variance for August 2019? (b) What is the total flexible-
What is the sales volume variance for the month? (Round all answers to the nearest whole dollar.)
2. Determine the professional labor rate and labor efficiency variances for August 2019, each rounded to
the nearest whole dollar.
3. What nonfinancial factors should Phoenix consider in evaluating the effectiveness and efficiency of
professional labor?
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 5 images
