Prepare the pro forma income statement that would appear

Assignment Help Accounting Basics
Reference no: EM133031905

Problem - Howard Cooper, the president of Zachary Computer Services, needs your help. He wonders about the potential effects on the firm's net Income if he changes the service rate that the firm charges its customers. The following basic data pertain to fiscal year 2019.

Standard rate and variable costs

 

Service rate per hour

$85.00

Labor cost

35.00

Overhead cost

6.60

Selling, general, and administrative cost

3.50

Expected fixed costs

 

Facility maintenance

$523,000

Selling, general, and administrative

143,000

Required -

a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 37,000 hours of services in 2019.

b. A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm can achieve. According to the consultant's analysis, if Zachary charges customers $80 per hour, the firm can achieve 44,000 hours of services. Prepare a flexible budget using the consultant's assumption.

c. The same consultant also suggests that if the firm raises its rate to $90 per hour, the number of service hours will decline to 31,000. Prepare a flexible budget using the new assumption.

Reference no: EM133031905

Questions Cloud

Five evaluation factors for a secondary source : 1. You have received a business research report done by a consultant for your firm, a life insurance company.
What is canadian job market : What is canadian job market in terms of professional career opportunities
Executive compensation strategy in fortune furnitech : Fortune Furnitech is a state-of-art modular furniture manufacturer, started with an initial ' 500 crores investment, by raising a term loan from different
Determining the high turnover rate : Almost 100 percent were satisfied with their compensation packages. Which action may reduce your high turnover rate?
Prepare the pro forma income statement that would appear : Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 37,000 hours of services in 2019
Educating student-athletes on social media : What are the advantages to collegiate athletic departments educating student-athletes on social media?
Relationships between variables graphically and numerically : What is the difference between examining relationships between variables graphically and numerically
Type of reward dissatisfaction : Each reward problem may trigger some type of reward dissatisfaction that could have adverse outcomes for organizations. Explain those adverse outcomes.
Calculated value of the total average si : What would be the calculated value of the total Average SI for 2023? (Round to 2 decimal places)

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd