Baker and Klatt (BK) is a law firm that gets a large portion of its revenue from corporate clients. In Year 2, BK€™s billable hours for corporate clients were up 20 percent from Year 1 levels, but, as the following data show, profits from corporate clients were the same in Year 2 as in Year 1.

Prepare an analysis like Exhibit 10.8 that shows why Year 2 operating profits did not increase despite the increase inrevenues.

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Year 2 Year 1 Billable Hours T Revenue Priin Cosi: 30,000 Hours 25,000 Hours $3,400,000 $3,000,000 Professional Salaries (all variable) Other Variable Costs ,850,000 1,500,000 (e.g., supplies, certain computer services) al Administrative (all fixed) 400,000 680,000700,000 $ 400,000 $ 400,000 470,000 Operating Profit