Tallon & Associates Is a Consulting Firm Specializing in Business

Essay

Tallon & Associates is a consulting firm specializing in business location studies. The results for last year, along with the budget, are as follows: $\begin{array}{lcc}& \text {Actual }& \text {Budget}\\ \text { Billable hours } & \underline{25,200} &\underline{ 24,000} \\ \text { Revenue } & \$ 2,772,000 & \$ 2,400,000 \\ \text { Professional salaries (variable) } & 1,310,000 & 1,200,000 \\ \text { Other variable costs } & 488,000 & 400,000 \\ \text { Fixed costs } & 492,000 & 450,000 \\ \text { Office management salaries (fixed) } & \underline{317,000} & \underline{225,000 }\\ \text { Operating profit } & \underline{\$165,000 }& \underline{\$125,000} \\\end{array}$

Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Prepare a flexible budget using billable hours as the measure of output.
b. Prepare a sales activity variance analysis.
c. Compute the sales price variance.