McElroy has the capacity to manufacture 50,000 units, management expected the likely demand for its product to be 40,000 units in 2021; as such, it prepared the master budget to manufacture and sell 40,000 units. In early January 2022, the company was pleasantly surprised to find out that it manufactured and sold 45,000 units in 2021. McElroy Company Master (Static) Budget For Year Ending December 31, 2021 Sales (40,000 units) $ 2,800,000 Cost of Goods Sold: $ 800,000 300,000 24,000 36,000 300,000 Direct materials Direct labor Indirect materials (variable) Indirect labor (variable) Depreciation Salaries 200,000 100,000 50,000 Utilities (80% fixed) Maintenance (40% variable) Gross profit Operating expenses: Commissions (5% of sales) 1,810,000 $ 990,000 Advertising (fixed) Wages (variable) Rent (fixed) $ 140,000 150,000 100,000 50,000 440,000 $ 550,000 Total operating expenses Operating Income Required: Prepare the flexible budget (FB) for the actual operating level achieved in 2021.