Develop flexible budgets Develop flexible budgets Check my Accoretng to its orig

Question

Develop flexible budgets Develop flexible budgets Check my Accoretng to its original plan, Rooney Consulting Services Company plans to charge its customers for service at $132 per hour 2018 fue company president expects consulting services provided to customers to reach 52,000 hours at that rate. The marketihg manager, however, argues that actual results may range from 49,000 hours to 55,000 hours because of market uncertainty. Rooney's standard variable cost is $42 per hour, and its standard fixed cost is $1,320,000 Required Develop flexible budgets based on the assumptions of service levels at 49,000 hours, 52,000 hours, and 55,000 hours Flexible Budget Flexible Budget Flexible Budget 49,000 Hours 52,000 Hours 55,000 Hours

Explanation / Answer

Note: Service revenue @ $132 per hour.

Variable costs @ $42 per hour

Fixed costs will remain unchanged at different service levels.

Flexible Budget 49,000 Hours Flexible Budget 52,000 Hours Flexible Budget 55,000 Hours Service revenue 6468000 6864000 7260000 Variable costs 2058000 2184000 2310000 Contribution margin 4410000 4680000 4950000 Fixed costs 1320000 1320000 1320000 Net income $ 3090000 3360000 3630000

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