14. In a flexible budget for a profit center, which of the following items would not be expected to vary with the level of activity?

a.Revenue

b.Variable manufacturing overhead

c. Direct materials cost

d. Fixed manufacturing overhead

15.

Skelton Corporation had planned to produce 50,000 units of product during the first quarter of the current year. The company prepared the following budget on May 1:

	Budgeted (50,000 units)
Variable costs:
Direct materials used	$	36,000
Direct labor		45,000
Variable overhead		22,500
Fixed costs:
Manufacturing overhead		58,500
Total manufacturing costs	$	162,000

During the first quarter, Skelton produced 60,000 units and incurred total manufacturing costs of $184,000.

Which of the following amounts should not be included in Skelton's flexible budget at a 60,000-unit level?

a. Direct labor, $54,000

b. Direct materials used, $43,200

c. Fixed manufacturing overhead, $70,200

d. Variable overhead, $27,000

16.

Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 80,000 T-shirts:

Sales	$	1,400,000
Cost of Goods Sold		820,000
Gross Profit		580,000
Operating Expenses ($100,000 is fixed)		418,400
Operating Income		161,600
Income Taxes (30% of operating income)		48,480
Net Income	$	113,120

Cost of goods sold and variable operating expenses vary directly with sales, and the income tax rate is 30% at all levels of operating income. If the concert season is slow due to poor weather, Baskin estimates that sales could fall to as low as 60,000 T-shirts.

In a flexible budget for sales of 60,000 T-shirts, how much would Baskin budget for operating expenses?

a. $418,400

b. $338,800

c. $238,800

d. $218,400