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.)


Partner
Staff

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 7 months ago

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