Comparing budgeted and actual amounts. Excel Consultants, Inc., is a business consulting firm. During the year 19X1 the firm earned a net income of $136,000. This amount was more than the net income projected in the firm’s operating budget. Management thinks this is largely due to the fact that 6,200 billable hours were worked, while the budget was for 6,000 billable hours. (Billable hours are the hours for which clients are charged. Some hours worked by the firm’s staff are not billable because the staff members are not involved in a consulting job for a client.) The firm’s managing partner has asked you to prepare a comparison of the actual results and the results that would have been anticipated in a flexible budget based on 6,200 billable hours, the actual number of billable hours for the year.

Instructions Prepare a three-column statement showing the actual income statement figures, the flexible budget based on actual billable hours, and the variance between each item.

Transcribed Image Text:

Billable Hours Revenues From Charges to Clients Fixed Professional Salaries Variable Professional Salaries Other Fixed Expenses Other Variable Expenses Total Expenses Net Income for Year Income Statement Operating (Actual) Budget 6,200 6,000 $705,000 $660,000 $210,000 $200,000 108,000 120,000 100,000 100,000 151,000 134,000 $569,000 $554,000 $136,000 $106,000