Prepare a flexible budget

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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 hoursa

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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