Question

Curtis Salter, the president of Kasimer 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 2015. Standard rate and variable costs Service rate per hour Labor cost Overhead cost Selling. general, and administrative cost Expected fixed costs Facility maintenance Selling general, and administrative 84.00 31.00 6.40 400 $520,000 146.000 Required a. Prepare the pro forma Income statement that would appear in the master budget if the firm expects to provide 32,000 hours of services in 2015. KASIMER COMPUTER SERVICES Pro Forma Income Statement Master Budget Variable costs Fixed costs

Answer 1

Ans A Kasimer Computer Services Pro forma Income Statement Service Revenue 2688000 Variable Costs Labor Costs 992000 Overhead Costs 204800 Selling and Administrative Costs 128000 1363200 Fixed Costs Facility Maintenance 520000 Selling and Administrative Costs 146000 666000 Net Income 658800 Ans B Kasimer Computer Services Pro forma Income Statement Service Revenue 3002000 Variable Costs Labor Costs 1178000 Overhead Costs 243200 Selling and Administrative Costs 152000 1428800 Fixed Costs Facility Maintenance 520000 Selling and Administrative Costs 146000 666000 Net Income 907200

5 Ans C Kasimer Computer Services Pro forma Income Statement 2225000 Service Revenue Variable Costs Labor Costs Overhead Costs Selling and Administrative Costs Fixed Costs Facility Maintenance Selling and Administrative Costs Net Income 775000 160000 100000 1190000 520000 146000 666000 369000