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 124,000 liters at a budgeted price of $255 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor (2 pounds @ $16) (0.5 hours @ $48) $32 24 Variable overhead is applied based on direct labor hours. The variable overhead rate is $140 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $70 per unit. All non-manufacturing costs are fixed and are budgeted at $2.4 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $774,000 unfavorable. Required Prepare a flexible budget for Paynesville for the year. (Enter your answers in thousands of dollars.)