Question

Howard Cooper, the president of Glacier 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 2019: Standard rate and variable costs Service rate per hour $ 60.00 Labor cost 32.00 Overhead cost 5.76 Selling, general, and administrative cost 3.44 Expected fixed costs Facility maintenance $ 320,000 Selling, general, and administrative 120,000 Required Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 30,000 hours of services in 2019. 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 Glacier charges customers $56 per hour, the firm can achieve 38,000 hours of services. Prepare a flexible budget using the consultant’s assumption. The same consultant also suggests that if the firm raises its rate to $64 per hour, the number of service hours will decline to 25,000. Prepare a flexible budget using the new assumption.

Answer 1

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

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