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.
a) describe the major weakness of the performance report.
b) describe clearly why all the variances for the variable expenses are unfavourable (U).
c) 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).)