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.

a These are hours billed to clients. They are fewer than the number of hours worked because there is non billable 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).

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Reported Income Master Statement Budget 7,200 9,000 Revenue. Other variable costs (e.g., supplies, computer services) 98,000 120,000 200,000