Crane Corporations master (static) budget for the year is shown below: Sales (60,000 units) $1,860,000 Cost of goods sold: Direct materials$168,000 Direct labor 450,000 Overhead (variable overheadapplied at 40% of direct labor cost) 240,000 858,000 Gross profit $1,002,000 Selling expenses: Sales commissions (all variable)$167,400 Rent (all fixed) 40,000 Insurance (all short-term fixed) 30,000 General expenses: Salaries (all short-term fixed) 92,000 Rent (all short-term fixed) 77,000 Depreciation (all short-term fixed) 50,000 456,400 Operating income $545,600

Required:1. During the year, the company manufactured and sold 55,000 units of product. Prepare a flexible budget for this level of output.

2. Now suppose that the actual level of output was 65,000 units. Prepare a flexible budget for this output level.