Howard Cooper, the president of Stuart 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 $1$:

$\backslash$table$[[$Standard rate and variable costs,$63\mathrm{.}00],[$Service rate per hour,$29\mathrm{.}00],[$Labor cost$,5\mathrm{.}65],[$Overhead cost$,3\mathrm{.}40],[$Selling$,$ general, and administrative cost,$],[$Expected fixed costs,$320,000],[$Facility maintenance,$120,000]]$

Required:

a$.$ Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide $32,000$ hours of services in Year $1.$

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 Stuart charges customers $$58$ per hour, the firm can achieve $36,000$ 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 $$68$ per hour, the number of service hours will decline to $28,000.$ Prepare a flexible budget using the new assumption.

d$.$ Which pricing strategy should be adopted?

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

Required B

Required C

The same consultant also suggests that if the firm raises its rate to $$68$ per hour, the number of service hours will decline to $28,000.$ Prepare a flexible budget using the new assumption.

$\backslash$table$[[$STUART COMPUTER SERVICES$],[$Pro Forma income Statement$],[$Flexible Budget$],[$Services revenue$]]$