A. Complete a flexible budget for 20,000 units produced. Use the following information at a production level of 15,000 units to complete the flexible budget:

Budgeted units	15,000
Revenue	$1,500,000
Expenses:
Wages and Salaries ($200,000 + $10Q)	$350,000
Utilities (variable)	$300,000
Depreciation (fixed)	$200,000
Total expenses	$850,000
Net operating income	$650,000

Q = units produced

Budgeted units	20,000
Revenue
Expenses:
Wages and Salaries ($200,000 + $10Q)
Utilities (variable)
Depreciation (fixed)
Total expenses
Net operating income

B. Calculate the activity variances and the revenue and spending variances using the information from #1 above and the following actual cost results at 20,000 units produced:

Actual Units	20,000
Revenue	$1,950,000
Expenses:
Wages and Salaries	$410,000
Utilities	$395,000
Depreciation	$207,000
Total expenses	$1,012,000
Net operating income	$938,000

Actual Units	Actual Results	Revenue & Spending Variances	Flexible Budget	Activity Variances	Planning Budget
Revenue
Expenses:
Wages and Salaries
Utilities
Depreciation
Total expenses
Net operating income