Question

K & B is a small management consulting firm. Last month, the firm billed fewer hours than expected, and as expected, profits were lower than anticipated.

                                   Reported Income statement          Master budget

Billable hours*                         11,000                                    10,000

Revenue                         $1,285,000                                 $1,250,000

Professional salaries(all variable)            665,000                                     605,000

Other variable costs (e.g supplies)          170,000                                     160,000

Fixed costs                                               285,000                                     300,000

Profit                                                       $ 165,000                                 $ 185,000

*these are hours billed to clients. They are fewer than the number of hours worked because there is nononbillable time (e.g. slack periods, time in training sessions) and because some time worked for clients is not charged to them.

Required:   Prepare a sales activity analysis.

Answer 1

	SALES ACTIVITY ANALYSIS
	Revenue / Sales		$ 1,375,000.00
Less :	Costs :-
	Professional Salaries (all variables)	$    665,500.00
	Other Variable Costs	$    176,000.00
	Fixed Costs	$    300,000.00
	Total Cost	$ 1,141,500.00	$ (1,141,500.00)
	Profit		$     233,500.00

WORKING NOTES gdgfg

1)

Revenue = ($ 11,000/$ 10,000)*12,50,000)   = $ 13,75,000

Professional Salaries = ($ 11,000/$ 10,000)* $ 6,05,000)   = $ 6,65,500 Other Variable Cost = ($ 11,000/$ 10,000)* $ 1,60,000)   =