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Fougere Realtors, Inc._BUdgets




Question;Fougere Realtors, Inc. specializes in home;re-sales. It earns revenue from selling fees. Fougere 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;Budget;Actual Variance;Number of home;re-sales;180;202;22 F;Variable expenses;Sales;commissions;$1,102,950;$1,205,183 $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;$1,966,050;$2,154,403 $188,353 U;Fixed expenses;General overhead;60,000;62,300;2,300 U;Total;expenses $2,026,050 $2,216,703 $190,653 U;Required;a) Explain the major weakness of this performance;report and why all the variances for the variable expenses are;unfavourable (U) (5 marks);b) As a first step in;helping Chris Fougere to evaluate cost / expense control in the organization;complete the following for the year ended December 31, 2007, assuming the only;cost driver is the number of home re-sales. (Note: Indicate any variance;as either favourable (F) or unfavourable (U).) (15 marks);Budget;Actual Variance;Number of home;re-sales 202;202;0;Variable expenses;Sales;commissions $;$ 1,205,183;Automobile $;39,560;Advertising $;192,690;General;overhead $;716,970;Total $;$2,154,403;Fixed expenses;General;overhead $;62,300;Total;expenses $ $2,216,703


Paper#38239 | Written in 18-Jul-2015

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