Response to the following problem:
Using a flexible budget to accommodate market uncertainty According to its original plan, Darey Consulting Services Company would charge its customers for service at $125 per hour in 2011. The company president expects consulting services provided to customers to reach 45,000 hours at that rate. The marketing manager, however, argues that actual results may range from 40,000 hours to 50,000 hours because of market uncertainty. Darey's standard variable cost is $48 per hour, and its standard fixed cost is $1,500,000.
Required:
Develop flexible budgets based on the assumptions of service levels at 40,000 hours, 45,000 hours, and 50,000 hours.