re-s les. It earns revenue from selling tees. Fougère
Realtors' major costs are commissions for salespersons, listing agents, and listing companies. Its business has
improved steadily over the last ten years. As usual, Chris Fougere, the managing partner of Fougere Realtors,
Inc., received a report summarizing the performance for the most recent year.
Fougere Realtors, Inc.
Performance Report
For the year ended December 31, 2007
Required:
Budget
Actual Variance
a) Explain the major weakness of this
performance report and why all the
variances for the variable expenses are
Number of home re-sales
unfavourable (U) (5 marks)
180
202
22 F
Variable expenses
Sales commissions
$\text{1,102,950}
$\text{1,205,183}
$\text{102,233}
U
Automobile
36,000
39,560
3,560 U
Advertising
171,000
192,690
21,690 U
General overhead
656,100
716,970
60,870 U
Total
$\text{1,966,050}
$\text{2,154,403}
$\text{188,353}
U
b) As a first step in helping Chris Fougere
to evaluate cost / expense control in the
organization, complete the following
report for the year ended December 31,
Fixed expenses
General overhead
60,000
62,300
2,300 U
2007, assuming the only cost driver is the
Total expenses
$\text{2,026,050}
$\text{2,216,703}
$\text{190,653}
U
number of home re-sales. (Note: Indicate
any variance as either favourable (F) or
unfavourable (U).) (15 marks)
Budget
Actual
Variance
202
202
0
Number of home re-sales
Variable expenses
Sales commissions
$
$\text{1,205,183}
Automobile
$
39,560
Advertising
$
192,690
General overhead
$
716,970
Total
$
$\text{2,154,403}
Fixed expenses
General overhead
$
62,300
