Howard Cooper, the president of Fanning Computer Services, needs your help. He wonders about the potentlal effec on the firm's net income If he changes the service rate that the firm charges its customers. The following basic data pertalin to fiscal Year $3.$

Standard rate and variable costs

service rate per hour

Labor cost

Overhead cost

Selling, general, and administrative cost

expected fixed costs

cacility maintenance

Selling, general, and administrative

$$86\mathrm{.}60$

$32\mathrm{.}80$

$6\mathrm{.}90$

$3\mathrm{.}90$

$$515,600$

$147,8e8$

Requlred:

a$.$ Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide $39,000$ hours of services in Year $3.$

b$.$ A marketing consultant suggests to Mr$.$ Cooper that the service rate may affect the number of service hours that the firm can achleve. According to the consultant's analysis, If Fanning charges customers $$81$ per hour, the firm can achleve $48,000$ hours of services. Prepare a flexible budget using the consultant's assumption.

c$.$ The same consultant also suggests that if the firm ralses its rate to $$91$ per hour, the number of service hours will decline to $35,000.$ Prepare a flexible budget using the new assumption.

Complete this question by entering your answers in the tabs below.

Required $A$

Required B

Required $C$

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 Fanning charges customers $$81$ per hour, the firm can achieve $48,000$ hours of services. Prepare a flexible budget using the consultant's assumption.

FANNING COMPUTER SERVICES

Pro Forma Income Statement

Flexible Budget

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