The Turko Construction Company Civil Engineers consists of two divisions. The divisions are Water and Infrastructure. The company sells engineering services to various customers. The following are the bill rates for the various staff classifications:

Vice President $250/hour

Senior Engineer $200/hour

Associate Engineer $190/hour

Staff Engineer $160/hour

The two divisions expect to bill the following hours:

Water- 10,000 hours, vice president at 10% of the time, 20% of Senior Engineer time 10% to

Associate engineers and remaining to Staff Engineers.

Waste Water- 6,000 hours, vice president at 12% of the time, 20% of Senior Engineer time, 5%

to Associate engineers and remaining to Staff Engineers.

The Direct Labor costs per hours are as follows:

Vice President $90/hour

Senior Engineer $70/hour

Associate Engineer $60/hour

Staff Engineer $50/hour.

The utilization (billable ratio to total hours) for each staff members are as follows:

Vice President 60%

Senior Engineer 80%

Associate Engineer 85%

Staff Engineer 90%.

The company has the following other costs:

Admin Salaries $81,000

Rent $120,000

Utilities $16,000

Benefits $75,000

Assume that there are 2080 hours per year that each engineer can work including vacation and other

benefit hours.

(1). Assume that the actual utilization came in at the following rates:

Vice President 50%

Senior Engineer 82%

Associate Engineer 88%

Staff Engineer 93%

Based on the above utilization, prepare a flexible budget and calculate the Level 2/3 variances.