Question

K&B is a small management consulting firm. Last month, the firm billed fewer hours than expected, and, as expected, profits were lower than anticipated.

	Reported Income Statement				Master Budget
Billable hoursa			11,000			10,000
Revenue		$	1,330,000		$	1,300,000
Professional salaries (all variable)			685,000			630,000
Other variable costs (e.g., supplies, computer services)			170,000			160,000
Fixed costs			280,000			290,000
Profit		$	195,000		$	220,000

^aThese are hours billed to clients. They are fewer than the number of hours worked because there is nonbillable time (e.g., slack periods, time in training sessions) and because some time worked for clients is not charged to them.

Required:

Prepare a sales activity variance analysis. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Answer 1