Cost Accounting

Crane Corporations master (static) budget for the year is shown below:

Sales (60,800 units)				$	2,371,200
Cost of goods sold:
Direct materials	$	218,880
Direct labor		504,640
Overhead (variable overhead applied at 30% of direct labor cost)		248,000			971,520
Gross profit				$	1,399,680
Selling expenses:
Sales commissions (all variable)	$	168,720
Rent (all fixed)		48,000
Insurance (all fixed)		38,000
General expenses:
Salaries (all fixed)		96,000
Rent (all fixed)		81,000
Depreciation (all fixed)		58,000			489,720
Operating income				$	909,960

Required:

1)During the year the company manufactured and sold 55,800 units of product. Prepare a flexible budget for this level of output. 2)Now suppose, that the actual level of output was 65,800 units. Prepare a flexible budget for this level of output.