Balmer Corporation's master budget for the year is presented below:

Sales (50,000 units)				$	1,600,000
Cost of goods sold:	$	150,000
Direct materials		450,000
Direct labor		240,000			840,000
Overhead (Variable overhead applied at 40% of direct labor cost)				$	760,000
Gross profit
Selling expenses:
Sales commissions (all variable)	$	160,000
Rent (all fixed)		40,000
Insurance (all fixed)		30,000
General expenses:
Salaries (all fixed)		92,000
Rent (all fixed)		77,000
Depreciation (all fixed)		51,000			450,000
Operating income				$	310,000

During the period, the company manufactured and sold 42,000 units.

Required:

1. Prepare a flexible budget (FB) for the actual output level achieved during the period; state each item at nearest whole dollar. 2. What is the definition of a FB? For what managerial purpose is a FB useful? Be specific about the types of information (and variances) that management can generate, at the end of an accounting period, given a flexible budget and its master (static) budget.