Jillian Taylor manages the Colorado mortgage processing office of M& S Financial Services. M& S generates mortgage applications via Internet leads that are followed up by a sales force that reports to a manager other than Jillian. Once the salespeople secure a mortgage application from a client, Jillian’s office prepares all the various mortgage documents required to close the mortgage for M& S and provide the financing to the client. In preparing her budget for next year, she estimates the following budgeted amounts:

All of Jillian’s expenses are for mortgage processors. The costs of the salespeople and marketing expenses are in a different budget. Since the number of mortgages expected to be processed each month does not vary over the fiscal year, Jillian and M& S prepare a budget for a typical month and use it for all 12 months in the fiscal year. Required: a. Jillian and M& S senior management forecast 90 mortgages per month will be processed in the Colorado office. Prepare the monthly budget for Jillian’s office for next year, assuming 90 mortgages per month. b. After the budget is prepared, the economy slips into a severe recession and home sales, new mortgages, and mortgage refinancings fall dramatically. In May ( the fifth month of the fiscal year), Jillian’s office processes 70 mortgages and has the following operating expenses:
Actual Costs
Salaries ......... $ 17,500
Supplies......... 1,550
Legal ........... 4,100
Telecom IT ......... 920
Occupancy ......... 3,100
Based on the budget from part (a), prepare a performance report for Jillian’s operations for the month of May.
c. Write a short memo summarizing Jillian’s performance based on the performance report prepared in part (b).
d. Does the performance report in part (b) accurately measure Jillian’s performance in May? What ( if any) changes in the performance report would yourecommend?

  • CreatedDecember 15, 2014
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