oceightboX PROBLEM 9-23 Critiquing a Report; Preparing a Performance Budget Exchange Corp. is a company that acts as a facilitator in tax-favored real estate swaps. Such swaps, know 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 Exchange Corp Analysis of Revenues and Costs For the Month Ended May 31 Actual Unit Revenues Planning Budget Unlt Revenues and CostsUnit and Costs Exchanges completed . Revenue 50 $385 40 $395 $10 U Legal and search fees.... Office expenises Equipment depreciation 184 166 135 10 19 U 23 F 2 F 112 36 344 Insurance 1 F Total expense. Net operating income 360 s 35 41 Note that the revenues and costs in the above report are unit revenues and costs. For example, the average office expense is $135 per exchange completed on the planning budget whereas, the average actual office expense is $112 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 $5,200. of the company's revenues come from fees collected when an exchange is completed. Required 1. Evaluate the report prepared by the bookkeeper 2. Prepare a performance report that would help the owner/manager assess the performance of the company in May 3. Using the report you created evaluate the performance of the company in May. Essay questions: Answer on separate page. Proper English required. what assumption is made about cost behavior when actual results are directly compared to a static planning budget? Why is the assumption questionable? What assumption is made about cost behavior when all of the items in a static planning budget are adjusted in proportion ta a change in actvity? why is the assumprion questionable