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 114,000 liters at a budgeted price of $180 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor (2 pounds @ $11) (0.5 hours @ $38) $ 22 19 Variable overhead is applied based on direct labor hours. The variable overhead rate is $90 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $45 per unit. All non- manufacturing costs are fixed and are budgeted at $1.9 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $564,000 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 $ 0 Total variable costs Contribution margin $ 0 Fixed costs: Manufacturing overhead Non-manufacturing Total fixed costs 0 Operating profits 0