Question

Prepare an analysis of the revenue change, separating the productivity effect (billing percentage)
from the volume effect (increase in number of consultants).

Exhibit 4: Budget and Actual Income Statement: Quarter 2 2000
			Actual	Budget
	Revenues		$               3,264,000	$               3,231,900
	Less:
	Consultants' Salaries and Fringes		$               2,029,050	$               1,748,250
	Operating Expenses		$                  938,560	$                  877,300
	Total Expenses		$               2,967,610	$               2,625,550
	Operating Profit		$                  296,390	$                  606,350
	Profit %		9.1%	18.8%
	Operating Statistics
	Number of Consultants(FTE)		113	105
	Hours Supplied		50,850	47,250
	Hours Billed		39,000	35,910
	Average Billing Rate		$                     83.69	$                     90.00

Your Solution:
		Actual Consultant Hours Supplied	Actual Billing %	Expected Billing %	Expected Billing Rate	Variance Amount	Favorable/ Unfavorable?
Consultant Billing Percentage
		Actual Consultant Hours Supplied	Expected Consultant Hours Supplied	Expected Billing %	Expected Billing Rate	Variance Amount	Favorable/ Unfavorable?
Consultant Quantity

Answer 1

Actual Consultant Hours Supplied	Actual Billing %	Expected Billing %	Expected Billing Rate	Variance Amount	Favorable/
					Unfavorable?
50850	76.70%	76%	90	31860	Favorable
Actual Consultant Hours Supplied	Expected Consultant Hours Supplied	Expected Billing %	Expected Billing Rate	Variance Amount	Favorable/
					Unfavorable?
50850	47250	76%	90	246240	Favorable
Actual
Particulars	Contract	Solutions	Total
Billed hours	24000	15000	39000
Billing rate	56	128	83.69
Billed revenues	1344000	1920000	3264000
Hours supplies	28800	22050	50850
Consultant cost	1036800	992250	2029050
Hourly cost/consultant	36	45	39.9
Billed %	83.30%	68%	76.70%
Budget
Particulars	Contract	Solutions	Total
Billed hours	20160	15750	35910
Billing rate	54	136.08	90
Billed revenues	1088640	2143260	3231900
Hours supplies	25200	22050	47250
Consultant cost	756000	992250	1748250
Hourly cost/consultant	30	45	37
Billed %	80%	71.40%	76%