Flexible budget for a service business Three-C Computer Service sells computer process- ing services and related support
Question:
Flexible budget for a service business Three-C Computer Service sells computer process- ing services and related support services. Company management uses a fixed budgeting system for planning and control purposes, because of the belief that computer operations are primarily fixed cost oriented. However, recently management has been evaluating the possibility of using a flexible budgeting system. Cost behavior data have been prepared during the last several months and are presented below.
REQUIRED
a. Prepare a flexible budget for Three-C Computer Services at sales levels of $175,000, $200,000, and $225,000.
b. Compute the break-even level of activity for the company.
c. If the company's actual level of sales turns out to be $220,000, what portions of the firm's costs were fixed costs?
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