Health Care Inc. (HCI) uses a flexible budgeting system, rather than only the current master budget. The following data are available for HCI's expected costs at production levels of 100,000, 110,000, and 120,000 units:

Variable costs

Manufacturing......................$8 per units

Administrative......................$4 per units

Selling................................$3 per units

Fixed costs

Manufacturing.........................$350,000

Administrative.........................$150,000

Instructions

(a) Prepare a flexible budget for each of the possible production levels: 100,000,110,000, and 120,000 units.

(b) If HCI sells its product for $35 each, how many units will it have to sell to make a profit of $500,000 after taxes? The company tax rate is 20%.