K&B is a small management consulting firm. Last month, the firm billed fewer hou
ID: 2531602 • Letter: K
Question
K&B is a small management consulting firm. Last month, the firm billed fewer hours than expected, and, as expected, profits were lower than anticipated.
Reported Income Statement Master Budget
Billable hours (a) 7,280 9,400
Revenue 678,000 $ 818,000
Professional salaries (all variable) 344,000 404,000
Other variable costs (e.g., supplies, computer services) 98,800 120,800
Fixed costs 206,600 201,600
Profit $ 28,600 $ 91,600
(a)These are hours billed to clients. They are fewer than the number of hours worked because there is nonbillable time (e.g., slack periods, time in training sessions) and because some time worked for clients is not charged to them.
Required: Prepare a flexible budget for K&B. Use billable hours as the measure of output (that is, units produced). (Do not round intermediate calculations.)
Flexible Budget
Revenue =
Costs:
Professional Salaries =
Other Variable Costs =
Fixed Costs =
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Flexible Budget Paticulars 7,280 Billable hours Revenues = 818000/9400 * 7280 633,514.89 Costs : Professional Salaries = 404000/9400*7280 312,885.11 Other Variable Costs = 120800/9400*7280 93,555.74 Fixed Costs = 201,600.00 Total costs 608,040.85 Income = 25,474.04
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