Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 74,000 T-shirts:

Sales	$ 1,290,560
Cost of Goods Sold	754,060
Gross Profit	536,500
Operating Expenses ($100,000 is fixed)	394,520
Operating Income	141,980
Income Taxes (30% of Operating income)	42,594
Net Income	$ 99,386

Cost of goods sold and variable operating expenses vary directly with sales, and the income tax rate is 30% at all levels of operating income.

If the concert season is slow due to poor weather, Baskin estimates that sales could fall to as low as 54,000 T-shirts.

In a flexible budget for sales of 54,000 T-shirts, how much would Baskin budget for operating expenses?

$214,920.

$314,920.

$394,520.

$294,520.

What unit cost did Baskin use in budgeting the cost of goods sold for the year?

$5.90

$10.19.

$17.44.

Some other amount.

Assume Baskin actually achieves the 54,000 unit sales level, and that net income actually earned at this level was $56,200. A performance report would indicate that net income was:

$2,594 over budget.

$43,186 under budget.

$22,806 under budget.

At the budgeted level.