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

Part 1

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
Total Fixed CostsTotal Variable CostsSellingTotal CostsFixed CostsManufacturingProduction LevelsVariable CostsActivity LevelAdministrative
SellingTotal CostsAdministrativeProduction LevelsActivity LevelTotal Variable CostsVariable CostsFixed CostsTotal Fixed CostsManufacturing
Activity LevelAdministrativeTotal Variable CostsTotal Fixed CostsFixed CostsManufacturingProduction LevelsVariable CostsTotal CostsSelling
Fixed CostsTotal Variable CostsTotal CostsSellingTotal Fixed CostsManufacturingProduction LevelsAdministrativeActivity LevelVariable Costs		$		$		$
SellingTotal Fixed CostsManufacturingTotal Variable CostsProduction LevelsActivity LevelTotal CostsAdministrativeVariable CostsFixed Costs
Production LevelsTotal Fixed CostsTotal CostsManufacturingTotal Variable CostsAdministrativeFixed CostsSellingActivity LevelVariable Costs
Fixed CostsSellingVariable CostsManufacturingProduction LevelsTotal Variable CostsAdministrativeTotal CostsActivity LevelTotal Fixed Costs
Fixed CostsTotal Fixed CostsActivity LevelManufacturingTotal Variable CostsAdministrativeTotal CostsSellingVariable CostsProduction Levels
Total Fixed CostsFixed CostsTotal Variable CostsSellingVariable CostsTotal CostsActivity LevelProduction LevelsAdministrativeManufacturing
Activity LevelManufacturingVariable CostsProduction LevelsTotal Fixed CostsSellingTotal Variable CostsFixed CostsAdministrativeTotal Costs
Activity LevelAdministrativeTotal Variable CostsProduction LevelsTotal Fixed CostsSellingVariable CostsTotal CostsManufacturingFixed Costs
SellingTotal Variable CostsAdministrativeTotal Fixed CostsTotal CostsProduction LevelsManufacturingFixed CostsVariable CostsActivity Level		$		$		$

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Part 2

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