According to its original plan, Zachary Consulting Services Company plans to cha

Question

According to its original plan, Zachary Consulting Services Company plans to charge its customers for service at $129 per hour in 2018. The company president expects consulting services provided to customers to reach 45,000 hours at that rate. The marketing manager, however, argues that actual results may range from 40,000 hours to 50,000 hours because of market uncertainty. Zachary's standard variable cost is $42 per hour, and its standard fixed cost is $1,440,000.

Required

Develop flexible budgets based on the assumptions of service levels at 40,000 hours, 45,000 hours, and 50,000 hours.

Flexible Budget 40,000 Hours Flexible Budget 45,000 Hours Flexible Budget 50,000 Hours $ $ $

Explanation / Answer

Answer

flexible budget 40000 45000 50000 revenue ( * 129 ) 5160000 5805000 6450000 variable cost ( * 42 ) 1680000 1890000 2100000 contribution margin 3480000 3915000 4350000 fixed cost 1440000 1440000 1440000 net income 2040000 2475000 2910000

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