Howard Cooper, the president of Perez 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 3. $ 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 83.00 32.00 6.50 3.60 $516,000 144,000 Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 40,000 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 achieve. According to the consultant's analysis, if Perez charges customers $78 per hour, the firm can achieve 49,000 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 $88 per hour, the number of service hours will decline to 35,000. Prepare a flexible budget using the new assumption. ueline LU 53,00u. Piepare a lexueuuuye using Complete this question by entering your answers in the tabs below. Required A Required B Required C 1:47:21 Prepare the pro forma income statement that would appear in the master budget ifth of services in Year 3. . ok PEREZ COMPUTER SERVICES Pro Forma Income Statement Master Budget nces Variable costs: $ 0 Contribution margin Fixed costs: Net income $ 0 Required A Required B > 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 n achieve. According to the consultant's analysis, if Perez charges customers $78 per h of services. Prepare a flexible budget using the consultant's assumption. PEREZ COMPUTER SERVICES Pro Forma Income Statement Flexible Budget Variable costs: Contribution margin Fixed costs: 0 Net income $ 0 30 DOC Complete this question by entering your answers in the tabs below. 4.28 Doints Required A Required B Required 8 01:46:56 The same consultant also suggests that if the firm raises its rate to $88 per hour, the 35,000. Prepare a flexible budget using the new assumption. PEREZ COMPUTER SERVICES Pro Forma Income Statement Flexible Budget eBook References Variable costs: 0 Contribution margin Fixed costs Net Income 0 Bo 00 &
