5. Will rate.

Crane Corporations master (static) budget for the year is shown below:

Sales (60,000 units)				$	1,860,000
Cost of goods sold:
Direct materials	$	168,000
Direct labor		450,000
Overhead (variable overhead applied at 40% of direct labor cost)		240,000			858,000
Gross profit				$	1,002,000
Selling expenses:
Sales commissions (all variable)	$	167,400
Rent (all fixed)		40,000
Insurance (all short-term fixed)		30,000
General expenses:
Salaries (all short-term fixed)		92,000
Rent (all short-term fixed)		77,000
Depreciation (all short-term fixed)		50,000			456,400
Operating income				$	545,600

Required:

1. During the year, the company manufactured and sold 55,000 units of product. Prepare a flexible budget for this level of output.

2. Now suppose that the actual level of output was 65,000 units. Prepare a flexible budget for this output level.

Crane Corporation's master (static) budget for the year is shown below: $1,860,000 $168,000 450,000 240,000 858,000 $1,002,000 Sales (60,000 units) Cost of goods sold: Direct materials Direct labor Overhead (variable overhead applied at 40% of direct labor cost) Gross profit Selling expenses: Sales commissions (all variable) Rent (all fixed) Insurance (all short-term fixed) General expenses: Salaries (all short-term fixed) Rent (all short-term fixed) Depreciation (all short-term fixed) Operating income $167,400 40,000 30,000 92,000 77,000 50,000 456,400 $ 545,600 Required: 1. During the year, the company manufactured and sold 55,000 units of product. Prepare a flexible budget for this level of output. 2. Now suppose that the actual level of output was 65,000 units. Prepare a flexible budget for this output level. Complete this question by entering your answers in the tabs below. Required 1 Required 2 During the year, the company manufactured and sold 55,000 units of product. Prepare a flexible budget for this level of output. (Do not round intermediate calculations.) $ 1,705,000 CRANE CORPORATION Flexible Budget Sales Less: Cost of goods sold: Direct materials $ 154,000 Direct labor 412,500 Manufacturing overhead: Variable Fixed Gross profit Less: Operating expenses: Selling expenses: Sales commissions 566,500 $ 1,138,500 Rent Insurance General expenses: Salaries Rent Depreciation Operating income 0 $ 1,138,500 Required 1 Required 2 Now suppose that the actual level of output was 65,000 units. Prepare a flexible budget for this output level. (Do not round intermediate calculations.) CRANE CORPORATION Flexible Budget Sales Less: Cost of goods sold: Direct materials Direct labor Manufacturing overhead: Variable Fixed Gross profit Less: Operating expenses: Selling expenses: Sales commissions Rent 0 $ 0 Insurance General expenses: Salaries Rent Depreciation Operating income 0 $ 0