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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 (2 pounds @ $7) $14 (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.) Required Prepare a flexible budget for Paynesville for the year. (Enter your answers in thousands of dollars.) $ 12,218 PAYNESVILLE CORPORATION Flexible Budget (thousands of dollars) Sales revenue Variable costs: Materials Direct labor Variable overhead 1,318 1,460 2,430 $ 5,208 7,010 $ Total variable costs Contribution margin Fixed costs Manufacturing overhead Non-manufacturing $ 1,080 1,260 $ Total fixed costs Operating profits 2,340 4,670 $