Flounder Possible Inc. (FP) is a manufacturer of toaster ovens. To improve control ovewants to begin using a flexible budgeting system, rather than using only the current mavailable for FPs expected costs at production levels of 81,000, 90,000, and 99,000 units

Variable Costs

Manufacturing $ 5.00

Administrative $ 3.00

Selling $ 3.00

Fixed Costs

Manufacturing 144,000

Administrative 72,000

a. Prepare a flexible budget for each of the possible production levels: 81,000 Activity Level

Production Level 81,000 90,000

Variable Costs

Manufacturing 405,000 450,000

Administrative 243,000 270,000

Selling 243,000 270,000

891,000 990,000

Fixed Costs

Manufacturing 144,000 144,000

Administrative 72,000 72,000

216,000 216,000

Total Costs 1,107,000 1,206,000

b. If FP sells the toaster ovens for $16 each, how many units will it have to sell?

c. How many units will it have to sell to make a profit of $54,000 before taxes?