Question

Aspen Core Realtors, Inc., specializes in home sales. Revenue is earned from selling fees. Commissions for salespersons, listing agents, and listing companies are the main costs for the company. Business has improved steadily over the last ten years. As usual, Bonnie Boris, the managing partner of Aspen Core Realtors, Inc., received a report summarizing the performance for the most recent year. Aspen Core Realtor, Inc. Performance Report for the Year Ended December 31, 2015 Master Budget* Flexible Budget Actual*** Master-Actual Variance Total Selling Fees $2,052,000 $2,280,000 $2,243,200 191,200F Less Variable Costs Sales Commissions 1,102,950 1,225,500 1,205,183 102,233U Automobile 36,000 40,000 39,560 3,560U Advertising 93,600 104,000 103,450 9,850U Home Repairs 77,400 86,000 89,240 11,840U Variable Overhead 656,100 729,000 716,970 60,870U Less Fixed Costs General Overhead 60,000 60,000 62,300 2,300U Total Costs 2,026,050 2,244,500 2,216,703 190,653U Net Income 25,950 35,500 26,497 547F What is the most significant single cause of all of the total unfavorable variable cost variances shown in the Master-Actual Variance column?

Answer 1

	Number of home sales increased is the cause for unfavorable variable cost variance
	Master budget and flexible budget variable cost are different.
	Hence, it can be assumed that actual and budgeted number of home sales are different.
	This contributed to more cost in the actual data
	Hence, there is an unfavorable variance