P24-1A +Link Back to Chapter 22. Exhibit 22-7 (page 899). Cellular Technologies manufactures capacitors for cellular base stations and other communications applications. The company's static budget income statement for October 20X4 follows. It is based on expected sales volume of 9.000 units. Cellular Technologies' plant capacity is 9.500 units. If actual volume exceeds 9.500 units. Cellular Technologies must rent additional space. In that case, salaries will increase by 15%. rent will double, and insurance expense will increase by $1.000. Depreciation will be unaffected. CELLULAR TECHNOLOGIES Static Budget Income Statement October 20X4 Sales revenue.. Variable expenses: Cost of goods sold... Sales commissions. $189.000 72.000 9.450 Shipping expense 4.500 Fixed expenses: Salary expense 27,500 Depreciation expense. 13.250 Rent expense.... 11.250 Insurance expense. 2.750 Total expenses. 140.700 Operating income 48.300 Required 1. Prepare flexible budget income statements for 7.500. 9.000, and 11.000 units. 2. Graph the behavior of the company's total costs. 3. Why might Cellular Technologies' managers want to see the graph you prepared in requirement 2 as well as the columnar format analysis in requirement 1? What is the dis- advantage of the graphic approach in requirement 2?