Howard Cooper, the president of Finch 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 Labor cost Overhead cost Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative $ 81.00 35.00 7.10 3.70 $519,000 146,000 Required: a. Prepare the pro forma income statement that would appear in the master budget If the firm expects to provide 42,000 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 Finch charges customers $76 per hour, the firm can achieve 48,000 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 $86 per hour, the number of service hours will decline to 38,000. 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 The same consultant also suggests that if the firm raises its rate to $86 per hour, the number of service hours will decline to 38,000. Prepare a flexible budget using the new assumption. Complete this question by entering your answers in the tabs below. 1 Required A Required B Required C C Prepare the pro forma income statement that would appear in the master budget if the firm expects to pro of services in 2019. FINCH COMPUTER SERVICES Pro Forma Income Stat Master Budget 5 SER Variable costs: D enance Facility maintenance Labor cost Overhead cost Selling, general, and administrative costs Services revenue Calen Required B > Complete this question by entering your answers in the tabs below. Required A Required Required C A marketing consultant suggests to Mr. Cooper that the service rate may affect the number of service hours that the firm ca achieve. According to the consultant's analysis, if Finch charges customers $76 per hour, the firm can achieve 48,000 hours services. Prepare a flexible budget using the consultant's assumption. FINCH COMPUTER SERVICES Pro Forma Income Statement Flexible Budget nices Variable costs: Facility maintenance Labor cost Overhead cost Selling, general, and administrative costs Services revenue Prepare a flexible budget using the new assumption. Complete this question by entering your answers in the tabs below. Required A Required B Required The same consultant also suggests that if the firm raises its rate to $86 per hour, the number of service hours will decline to 38,000. Prepare a flexible budget using the new assumption. FINCH COMPUTER SERVICES Pro Forma Income Statement Flexible Budget Variable costs: Fixed costs: Required B
