Static and flexible budgets, service sector. Student Finance (StuFi) is a start-up that aims to use the power of social communities to transform the student loan market. It connects participants through a dedicated lending pool, enabling current students to borrow from a school’s alumni community. StuFi’s revenue model is to take an upfront fee of 40 basis points (0.40%) each from the alumni investor and the student borrower for every loan originated on its platform. StuFi hopes to go public in the near future and is keen to ensure that its financial results are in line with that ambition. StuFi’s budgeted and actual results for the third quarter of 2017 are presented below. 1. Prepare StuFi’s static budget of operating income for the third quarter of 2017. 2. Prepare an analysis of variances for the third quarter of 2017 along the lines of Figure 7-2 ; identify the sales volume and flexible budget variances for operating income. 3. Compute the professional labor price and efficiency variances for the third quarter of 2017. 4. What factors would you consider in evaluating the effectiveness of professional labor in the third quarter of 2017?
Static and flexible budgets, service sector. Student Finance (StuFi) is a start-up that aims to use the power of social communities to transform the student loan market. It connects participants through a dedicated lending pool, enabling current students to borrow from a school’s alumni community. StuFi’s revenue model is to take an upfront fee of 40 basis points (0.40%) each from the alumni investor and the student borrower for every loan originated on its platform. StuFi hopes to go public in the near future and is keen to ensure that its financial results are in line with that ambition. StuFi’s budgeted and actual results for the third quarter of 2017 are presented below. 1. Prepare StuFi’s static budget of operating income for the third quarter of 2017. 2. Prepare an analysis of variances for the third quarter of 2017 along the lines of Figure 7-2 ; identify the sales volume and flexible budget variances for operating income. 3. Compute the professional labor price and efficiency variances for the third quarter of 2017. 4. What factors would you consider in evaluating the effectiveness of professional labor in the third quarter of 2017?
Solution Summary: The author explains that the sales of the proposed project are more than all fixed and variable costs and thus, the project is generating an operating income.
Static and flexible budgets, service sector. Student Finance (StuFi) is a start-up that aims to use the power of social communities to transform the student loan market. It connects participants through a dedicated lending pool, enabling current students to borrow from a school’s alumni community. StuFi’s revenue model is to take an upfront fee of 40 basis points (0.40%) each from the alumni investor and the student borrower for every loan originated on its platform.
StuFi hopes to go public in the near future and is keen to ensure that its financial results are in line with that ambition. StuFi’s budgeted and actual results for the third quarter of 2017 are presented below.
1. Prepare StuFi’s static budget of operating income for the third quarter of 2017.
2. Prepare an analysis of variances for the third quarter of 2017 along the lines of Figure 7-2; identify the sales volume and flexible budget variances for operating income.
3. Compute the professional labor price and efficiency variances for the third quarter of 2017.
4. What factors would you consider in evaluating the effectiveness of professional labor in the third quarter of 2017?
Definition Definition Analysis of a difference between planned and actual behavior. After analyzing differences, companies find the reasons for variance so that the necessary steps should be taken to correct that variance.
Professional University teaches a large range of undergraduate courses. It is interested in determining the cost equation for the facilities cost as a function of student credit hours so that it an more accurately budget its facilities costs as enrollment grows. Information for the high and low cost semesters and volumes for last 5 years appears below
Semester Student Cresit Hours Facilities Cost
Spring 2007 250,000 $500,000
Fall 2004 300,000 $530,000
Using the high low method, with student credit hours as the activity driver, wht is the equation for facilities cost (FC) as a function of student credit hours?
South Hampton University is preparing its budget for the upcoming academic year. Thisis a specialised private university that charges fees for all degree courses. Currently, 30 000students are enrolled on campus. However, the university is forecasting a 5 per cent growthin student numbers in the coming year, despite an increase in fees to $3 000 per subject. Thefollowing additional information has been gathered from an examination of university recordsand conversations with university managers:1. South Hampton is planning to award scholarships to 200 students, which will covertheir fees.2. The average class has 80 students, and the typical student takes 4 subjects persemester. South Hampton operates 2 semesters per year.3. The average academic staff salary is $120 000 per annum including on-costs.4. South Hampton’s academic staff are evaluated on the basis of teaching, research,administration and professional/community service. Each of the academic staffteaches the equivalent of three…
South Hampton University is preparing its budget for the upcoming academic year. Thisis a specialised private university that charges fees for all degree courses. Currently, 30 000students are enrolled on campus. However, the university is forecasting a 5 per cent growthin student numbers in the coming year, despite an increase in fees to $3 000 per subject. Thefollowing additional information has been gathered from an examination of university recordsand conversations with university managers:1. South Hampton is planning to award scholarships to 200 students, which will covertheir fees.2. The average class has 80 students, and the typical student takes 4 subjects persemester. South Hampton operates 2 semesters per year.3. The average academic staff salary is $120 000 per annum including on-costs.4. South Hampton’s academic staff are evaluated on the basis of teaching, research,administration and professional/community service. Each of the academic staffteaches the equivalent of three…
Chapter 7 Solutions
MyLab Accounting with Pearson eText -- Access Card -- for Horngren's Cost Accounting
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