Doggone Groomers is in the dog-grooming business. Its operating costs are described by these formulas:

Puli, the owner, has determined that direct labour is the cost driver for all three categories of costs.

Instructions
(a) Prepare a flexible budget for activity levels of 550, 600, and 700 direct labour hours.
(b) Explain why the flexible budget is more informative than the fixed budget.
(c) Calculate the total cost per direct labour hour at each of the activity levels specified in part (a).
(d) The groomers at Doggone normally work a total of 650 direct labour hours during each month. Each grooming job normally takes a groomer 1¼ hours. Puli wants to earn a profit equal to 40% of the costs incurred. Determine what she should charge each pet owner for grooming.