GLACIER COMPUTER SERVICES 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 60 32 5.76 3.44 320,000 120,000 30,000 Part a. Expected hours of repair services Part b. Hourly charge Hours of repair services Part c. Hourly charge Hours of repair services 56 38,000 64 25,000 GLACIER COMPUTER SERVICES Flexible Budget Per Hr. Hours $ Standard Master Budget Flexible Budget Costs Per Hr. Per Hr. Per Hour Hours Hours Services revenue Variable costs: Labor cost 32.00 Overhead cost $ 5.76 Selling, general, & administrative cost 3.44 Contribution margin Fixed costs: Facility maintenance Selling general & administrative cost Net income Try again! Try again! d. Evaluation Since the service rate of $64 per hour may generate the highest net income, this pricing strategy should be adopted. $ Try again