Solution-Prepare a flexible budget

Prepare a flexible budget

Reference no: EM131644702

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	7,220	9,100
Revenue	$672,000	$812,000
Professional salaries (all variable)	341,000	401,000
Other variable costs (e.g., supplies, computer services)	98,200	120,200
Fixed costs	205,400	200,400
Profit	$27,400	$90,400

^aThese 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).

Reference no: EM131644702

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Prepare a flexible budget

Reference no: EM131644702

Reference no: EM131644702

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