Is a company that acts as a facilitator in tax

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Facilitator Corp. is a company that acts as a facilitator in tax-favored real estate swaps. Such swaps, known as 1031 exchanges, permit participants to avoid some or all of the capital gains taxes that would otherwise be due. The bookkeeper for the company has been asked to prepare a report for the company to help its owner/manager analyze performance. The first such report appears below: Facilitator Corp Analysis of Revenues and Costs For the Month Ended May 31 Planning Budget Unit Revenues and Costs $ $ $ $ $ $ Required: 1 Whether report prepared by the bookkeeper is useful as a performance report? Yes No 2 Facilitator Corp Flexible Budget Performance Report For the Month Ended May 31 Activity Variances U/F/None Revenue and Spending Variances U/F/None rev: 11_17_2012 Actual Unit Revenues and Costs Variances Exchanges completed 20 25 Revenue 750 705 45 U Expenses: Legal and search fees 135 139 4 U Office expenses 208 173 35 F Equipment depreciation 18 13 5 F Rent 55 43 12 F Insurance 11 10 1 F Total expense 427 378 49 F Net operating income 323 327 4 F Note that the revenues and costs in the above report are unit revenues and costs. For example, the average office expense is $208 per exchange completed on the planning budget; whereas, the average actual office expense is $173 per exchange completed. Legal and search fees is a variable cost; office expenses is a mixed cost; and equipment depreciation, rent, and insurance are fixed costs. In the planning budget, the fixed component of office expenses was $4,100. All of the company’s revenues come from fees collected when an exchange is completed. Complete a performance report that would help the owner/manager assess the performance of the company in May. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.) Planning Budget Flexible Budget Actual Results Exchanges completed Revenue $ $ $ $ $ Expenses: Legal and search fees Office expenses Equipment depreciation Rent Insurance Total expense Net operating income $ $ $ $ $
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