Question
In: Accounting
EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner...
EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner time has a $560 budgeted price and $280 budgeted variable cost. Each billable hour of staff time has a budgeted price of $140 and a budgeted variable cost of $80. For the most recent year, the partnership budget called for 8,700 billable partner-hours and 35,600 staff-hours. Actual results were as follows:
| Partner revenue | $ | 4,538,000 | 8,300 | hours |
| Staff revenue | $ | 4,930,000 | 35,000 | hours |
Required:
a. Compute the sales price variance. (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.)
|
b. Compute the total sales activity variance. (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.)
c. Compute the total sales mix variance. (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.)
d. Compute the total sales quantity variance. (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.)
Solutions
Expert Solution
| Answer | ||
| a) Sales price variance = (actual price - standard price) * actual sales units | ||
| Partner | Staff | |
| Actual sales | $ 8,300.00 | $35,000.00 |
| Actual price | $ 546.75 | $ 140.86 |
| Standard price | $ 560.00 | $ 140.00 |
| Sales price variance | $-1,10,000.00 | $30,000.00 |
| Effect | U | F |
| b) Total sale activity variance = sale mix variance + sale volume variance | ||
| -44907+ (-103093) | ||
| -148000 | ||
| c) sales mix variance | ||
| Partner | Staff | |
| Actual sales | 8300 | 35000 |
| Actual price | 546.75 | 140.86 |
| Standard price | 560 | 140 |
| variable cost | 280 | 80 |
| Contribution margin | 280 | 60 |
| Standard qty | 8700 | 35600 |
| Sales mix | 19.64% | 80.36% |
| Sale quantities in proportion of sales mix | 8504 | 34796 |
| Difference | -204 | 204 |
| Contribution margin | 280 | 60 |
| Variance | -57154 | 12247 |
| Sales mix variance | -44907 | U |
| d) Sales quantity variance | ||
| Partner | Staff | |
| Actual sales | 8300 | 35000 |
| Actual price | 546.75 | 140.86 |
| Standard price | 560 | 140 |
| variable cost | 280 | 80 |
| Contribution margin | 280 | 60 |
| Standard qty | 8700 | 35600 |
| Sales mix | 19.64% | 80.36% |
| Sale quantities in proportion of sales mix | 8504 | 34796 |
| Difference | -196 | -804 |
| Contribution margin | 280 | 60 |
| Variance | -54846 | -48247 |
| Sales volume variance | -103093 | U |
ekkarill92 answered 1 year agoRelated Solutions
EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner...
EZ-Tax is a tax accounting practice with partners and staff
members. Each billable hour of partner time has a $600 budgeted
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time has a budgeted price of $130 and a budgeted variable cost of
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EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner...
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EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner...
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time has a budgeted price of $140 and a budgeted variable cost of
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EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner...
EZ-Tax is a tax accounting practice with partners and
staff members. Each billable hour of partner time has a $580
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 $80. For the most recent year, the partnership budget
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