K&B is a small management consulting firm. Last month, the firm billed fewer hours than expected, and, as expected, profits were lower than anticipated.

Reported Income Statement Master Budget

Billable hours (a) 7,280 9,400

Revenue 678,000 $ 818,000

Professional salaries (all variable) 344,000 404,000

Other variable costs (e.g., supplies, computer services) 98,800 120,800

Fixed costs 206,600 201,600

Profit $ 28,600 $ 91,600

(a)These are hours billed to clients. They are fewer than the number of hours worked because there is nonbillable time (e.g., slack periods, time in training sessions) and because some time worked for clients is not charged to them.

Required: Prepare a flexible budget for K&B. Use billable hours as the measure of output (that is, units produced). (Do not round intermediate calculations.)

Flexible Budget

Revenue =

Costs:

Professional Salaries =

Other Variable Costs =

Fixed Costs =