Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 106,000 liters at a budgeted price of $120 per liter this year. The standard direct cost sheet for one liter of the preservative follows.

Direct materials	(2 pounds @ $7)	$	14
Direct labor	(0.5 hours @ $30)		15

Variable overhead is applied based on direct labor hours. The variable overhead rate is $50 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $25 per unit. All non-manufacturing costs are fixed and are budgeted at $1.5 million for the coming year.

At the end of the year, the costs analyst reported that the sales activity variance for the year was $396,000 unfavorable.

Required Prepare a flexible budget for Paynesville for the year. (Enter your answers in thousands of dollars.)

Exercise 16-34 (Algo) Flexible Budget (LO 16-2) Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 106,000 liters at a budgeted price of $120 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor $14 (2 pounds @ $7) (0.5 hours @ $30) 15 Variable overhead is applied based on direct labor hours. The variable overhead rate is $50 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $25 per unit. All non-manufacturing costs are fixed and are budgeted at $1.5 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $396,000 unfavorable. Required Prepare a flexible budget for Paynesville for the year. (Enter your answers in thousands of dollars.) PAYNESVILLE CORPORATION Flexible Budget (thousands of dollars) Sales revenue Variable costs: Materials Direct labor Variable overhead S 0 $ 0 Total variable costs Contribution margin Fixed costs: Non-manufacturing Manufacturing overhead S 0 Total fixed costs Operating profits $ 0