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Bas_tet [7]
3 years ago
7

According to its original plan, Benson Consulting Services Company plans to charge its customers for service at $135 per hour in

2018. The company president expects consulting services provided to customers to reach 52,000 hours at that rate. The marketing manager, however, argues that actual results may range from 48,000 hours to 56,000 hours because of market uncertainty. Benson's standard variable cost is $40 per hour, and its standard fixed cost is $1,310,000. Required Develop flexible budgets based on the assumptions of service levels at 48,000 hours, 52,000 hours, and 56,000 hours.
Business
1 answer:
levacccp [35]3 years ago
7 0

Answer:

See budget below

Explanation:

<em>A flexible budget is that which is prepared for different level of activities. It suitable for a situation where there exist a lot of possible scenarios. It is usually prepared using the assumptions of a static budget</em>

The flexible budget would be prepared as followed:

 Consulting Services Company

                                     <em><u>   Flexibe budget for 2018</u></em>

<em>Activity level (hrs)               48,000    52,000    56,000</em>

                                             $'000      $'000        $'000

Sales revenue ($135/hr)       6,480       7,020       7,560

Variable cost                       <u>(1920)        ( 2080)     (2240)</u>

Contribution                       4,560         4,940        5,320

Fixed costs                     <u>    (1,310)           (1,310)       (1,310)   </u>

Profit                                 <u>3,250             3,630       4,010</u>

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What is the range for the relative price of cloth such that the economy produces both cloth and food? From _______ to _______ .
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The answer is explained in detail below

Explanation:

a_{KC} = 2

a_{LC} = 2

a_{KF} = 3

a_{LF} = 1

Labor, L = 2000; Capital, K = 3000  

Labour constraint,

2Q_{c} + Q_{F} \leq 2000

Capital constraint ,

2Q_{c} + 3Q_{F} \leq 3000  

Solving the equation further, we get

Q_{F} \leq 2000 - 2Q_{C}

Q_{F} \leq 1000 - \frac{2}{3} Q_{C}

  • The range for the relative price of cloth such that the economy produces both cloth and food is  2/3 and 2
  • Low cloth production → economy will use relatively more labor to  produce cloth → opportunity cost of cloth is 2/3rd units of food.
  • High cloth  production → economy dips on labor → taking capital away from food  production → raising opportunity cost of cloth to 2 units of food.  
  • If relative price of cloth lies between 2/3 and  2 units of food, the economy  produces both goods.
  • If the price of cloth decreases below 2/3 → complete  specialization in food production → low compensation for producing cloth
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To avoid potential liability for misconduct in corporate operations, directors can refrain from reasonable supervision of work d
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In the case when the potential obligation is to be avoided for any misconduct while having operations in the corporate so the directors could refrain from the supervision of the delegated work to the corporate officers so that the work could not harm that result in help in attains the goals & objectives

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