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quired A Required B Required C pare the pro forma income statement that would app ervices in Year 3. JORDAN COMPUTER SERVICES Pro Forma Income Statement Master Budget

quired A Required B Required C pare the pro forma income statement that would app ervices in Year 3. JORDAN COMPUTER SERVICES Pro Forma Income Statement Master Budget

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 6CE
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Complete this question by entering your answers in the tabs below. Required A Required B Required C Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 31,000 hours of services in Year 3. JORDAN COMPUTER SERVICES Pro Forma Income Statement Master Budget Services revenue Variable costs: Labor cost Overhead cost Selling, general, and administrative costs $ Fixed costs: < Required A Required B >
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Required A Required B Required C Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 31,000 hours of services in Year 3. JORDAN COMPUTER SERVICES Pro Forma Income Statement Master Budget Services revenue Variable costs: Labor cost Overhead cost Selling, general, and administrative costs $ Fixed costs: < Required A Required B >
Howard Cooper, the president of Jordan 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 3. Standard rate and variable costs Service rate per hour $ 84.00 Labor cost 33.00 Overhead cost 6.60 Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative 3.50 $517,000 145,000 Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 31,000 hours of services in Year 3. 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 Jordan charges customers $79 per hour, the firm can achieve 39,000 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 $89 per hour, the number of service hours will decline to 27,000. Prepare a flexible budget using the new assumption.
Transcribed Image Text:Howard Cooper, the president of Jordan 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 3. Standard rate and variable costs Service rate per hour $ 84.00 Labor cost 33.00 Overhead cost 6.60 Selling, general, and administrative cost Expected fixed costs Facility maintenance Selling, general, and administrative 3.50 $517,000 145,000 Required: a. Prepare the pro forma income statement that would appear in the master budget if the firm expects to provide 31,000 hours of services in Year 3. 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 Jordan charges customers $79 per hour, the firm can achieve 39,000 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 $89 per hour, the number of service hours will decline to 27,000. Prepare a flexible budget using the new assumption.
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