Kitchen Help Inc. (KHI) is a manufacturer of toaster ovens. To improve control over operations, the president of KHI wants to begin using a flexible budgeting system, rather than use only the current master budget. The following data are available for KHI’s expected costs at production levels of 90,000, 100,000, and 110,000 units.

Variable costs Manufacturing $6 per unit Administrative $4 per unit Selling $2 per unit Fixed costs Manufacturing $160,000 Administrative $ 80,000 Instructions

(a) Prepare a fl exible budget for each of the possible production levels: 90,000, 100,000, and 110,000 units.

(b) If KHI sells the toaster ovens for $16 each, how many units will it have to sell to make a profi t of $200,000 before taxes?

AppendixLO1