Cost Items and Account Balances

Administrative salaries $15,500

Advertising for Headgears 11,000

Cash, December 1 0

Depreciation on factory building 1,500

Depreciation on office equipment 800

Insurance on factory building 1,500

Miscellaneous expensesfactory 1,000

Office supplies expense 300

Professional fees 500

Property taxes on factory building 400

Raw materials used 70,000

Rent on production equipment 6,000

Research and development 10,000

Sales commissions 40,000

Utility costsfactory 900

Wagesfactory 70,000

Work in process, December 1 0

Work in process, December 31 0

Raw materials inventory, December 1 0

Raw materials inventory, December 31 0

Raw material purchases 70,000

Finished goods inventory, December 1 0

Production and Sales Data

Number of Headgears produced 10,000

Expected sales in units for December

($40 unit sales price) 8,000

Expected sales in units for January 10,000

Desired ending inventory 20% of next months sales

Direct materials per finished unit 1 kilogram

Direct materials cost $7 per kilogram

Direct labor hours per unit .35

Direct labor hourly rate $20

Each cost is either fixed or variable. There are no mixed costs.

*Assume that Utility costs-factory are fixed costs.*

Prepare a flexible budget for manufacturing costs for activity levels between 8,000 and 10,000 units, in 1,000-unit increments.