Flex Electronics manufactures and sells two types of custom USB flash drives with organization logo: USB drive #1 and USB drive #2. The company forecasts the following data for year 2017: USB Drive #1 USB Drive #2 Direct Materials $3/unit $2/unit Direct Labor $4/unit $3/unit Setups 240 80 Pounds of materials 36,000 12,000 Machine hours 2,400 800 Selling & administrative expense $1.5/unit $1/unit Number of units completed 120,000 40,000 Selling price $14/unit $10/unit Flex has determined the following activity cost pools and cost driver levels for 2017: Activity Cost Pool Activity Cost Activity Cost Driver Machine setup $96,000 320 setups Material handling $88,000 48,000 pounds Machine operation $12,800 3,200 machine hours Total $196,800 Assume income tax rate is 30%. Required (1): prepare a budgeted income statement for year 2017 based on the above information. Flex Electronics also considers three alternative plans to improve its companywide profit:

Plan B: Lower the selling price of USB drive #1 to $13.5, which will increase the sales volume of USB drive #1 by 20,000 units. Assume Plan B does not affect the production and sale of USB drive #2. Further, activity cost pools and cost driver levels are presented below under this proposed plan:

Activity Cost Pool	Activity COst	Activity Cost Driver
Machine Setup,	108,000	360 Setups
Material Handling	99,000	54000 pounds
Machine Operation	14,400	3600 machine hrs
Total	221,400