Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve control over operations, the president of AP wants to begin using a flexible budgeting system, rather than use only the current master budget. The following data are available for APs expected costs at production levels of 86,000, 97,000, and 108,000 units.

Variable costs
Manufacturing		$6 per unit
Administrative		$4 per unit
Selling		$2 per unit
Fixed costs
Manufacturing		$138,000
Administrative		$77,000

(a)

Prepare a flexible budget for each of the possible production levels: 86,000, 97,000, and 108,000 units. (List variable costs before fixed costs.)

APPLIANCE POSSIBLE INC. Flexible Production Cost Budget
AdministrativeProduction LevelsTotal Fixed CostsActivity LevelSellingVariable CostsManufacturingFixed CostsTotal CostsTotal Variable Costs
Fixed CostsTotal CostsAdministrativeProduction LevelsSellingVariable CostsTotal Fixed CostsTotal Variable CostsActivity LevelManufacturing
Total CostsTotal Variable CostsProduction LevelsActivity LevelFixed CostsTotal Fixed CostsSellingManufacturingVariable CostsAdministrative
Fixed CostsTotal Fixed CostsAdministrativeProduction LevelsTotal CostsVariable CostsManufacturingActivity LevelSellingTotal Variable Costs		$		$		$
Fixed CostsVariable CostsTotal Fixed CostsTotal Variable CostsManufacturingActivity LevelProduction LevelsAdministrativeTotal CostsSelling
Total Variable CostsVariable CostsAdministrativeTotal Fixed CostsTotal CostsSellingActivity LevelFixed CostsProduction LevelsManufacturing
Total CostsTotal Fixed CostsAdministrativeTotal Variable CostsSellingFixed CostsVariable CostsProduction LevelsActivity LevelManufacturing
ManufacturingFixed CostsTotal Fixed CostsAdministrativeSellingTotal Variable CostsTotal CostsProduction LevelsVariable CostsActivity Level
Fixed CostsAdministrativeTotal CostsProduction LevelsManufacturingActivity LevelVariable CostsTotal Variable CostsTotal Fixed CostsSelling
Total Fixed CostsSellingActivity LevelProduction LevelsManufacturingAdministrativeVariable CostsTotal CostsFixed CostsTotal Variable Costs
Variable CostsFixed CostsActivity LevelManufacturingTotal Variable CostsSellingTotal CostsAdministrativeTotal Fixed CostsProduction Levels
Total Variable CostsTotal CostsFixed CostsVariable CostsManufacturingProduction LevelsSellingTotal Fixed CostsActivity LevelAdministrative		$		$		$

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(b)

If AP sells the toaster ovens for $16 each, how many units will it have to sell to make a profit of $225,800 before taxes?

Units to be sold