Please help me in understanding the following project

CH 23 Online Journal Air .12 REQUIRED: For this chapter's online journal, think about a business you want to start some day for yourself. It can be either be an online business or an online service provider or a physical shop. Some examples that come to mind are: an online personal shopper business for elders and people who can't leave the house during the pandemic. Or it can be a bakery who sells and delivers baked-goods or a reseller of masks imported from overseas or custom car shop. Be creative. It can be any legal business you want to start. 1. Create a exible budget for your business with these gures: Sales (price x quantity) - Cost of Goods Sold/ Variable Costs - Fixed Costs = Income from Operations Create 3 levels of sales/production for this budget. See the Flexible Budget on page 995 Exhibit 23.3. You can create this budget in Excel /Google Spreadsheet and copy and paste it into the text box by hitting "reply" for submission. 2. List the assumptions you used for the "Sales" figures and the "Cost figures". Where would you go to get realistic numbers for your flexible budget? What are the sources of these figures? 3. What would determine the different levels of sales/production? 4. What would you do if you had favorable or unfavorable revenue variances? 5. What would you do if you had favorable or unfavorable cost variances?To better understand what a favorable/unfavorable revenue and cost variance is, you can read your book obviously, and you can watch this YouTube Video. https://www.youtube.com/watch?v=SMTa1/Zu7QwPreparation of Flexible Budgets To prepare a flexible budget, follow these steps: P1 Identify the activity level, such as units produced or sold. Prepare a flexible budget and Identify costs and classify them as fixed or variable within the relevant interpret a flexible budget range of activity. performance report. 3 Compute budgeted sales (sales price per unit X number of units of activity). Then subtract the sum of budgeted variable costs ( variable cost per unit X number of units of activity) plus budgeted fixed costs. In a flexible budget, we express each variable cost in one of two ways: either as (1) a constant dollar amount per unit of sales or as (2) a constant percentage of a sales dollar. In the case of a fixed cost, we express its budgeted amount as the total amount expected to occur at any sales volume within the relevant range. Point: The total amount of a variable cost changes in direct proportion to a change in activity level. The total amount of fixed cost remains unchanged regardless of changes in the level of activity within a relevant (normal) operating range.Exhibit 23.3 shows a set of flexible budgets for SolCel for January 2017. CD SolCel's management decides that the number of units sold is the relevant activity level. (For SolCel, the number of units sold equals the number of units produced.) For purposes of preparing the exible budget, management decides it wants budgets at three different activity levels: 10,000 units, 12,000 units, and 14,000 units. (19 SolCel's management classifies its costs as variable (seven items listed under the \"Variable costs\" heading) or fixed page 995 (five costs listed under the \"Fixed costs\" heading). These classifications result from management's investigation of each expense using techniques such as the high-low or regression methods we showed in a previous chapter. Variable and fixed expense categories are not the same for every company, and we must avoid drawing conclusions from specific cases. Point: The usefulness ofa flexible budget depends on valid classification of variable and fixed costs. Some costs are mixed and must be analyzed to determine their variable and fixed portions. @ SolCel uses the sales price per unit, the variable cost per unit for each variable cost, and the three activity levels to compute sales and variable costs. For example, at the three different activity levels, sales are budgeted to equal $100,000 (computed as $10 X 10,000), $120,000 (computed as $10 X 12,000), and $140,000 (computed as $10 X 14,000), respectively. Likewise, budgeted direct labor equals $15,000 (computed as $1.50 X 10,000) if 10,000 units are sold and $21,000 (computed as $1.50 X 14,000) if 14,000 units are sold. SolCel then lists each of the fixed costs in total. For Month Ended January 31, 2017 Flexible Budget Variable Total Amount Fixed per Unit Cost Sales $10.00 Variable costs Direct materials 1 00 Direct labor 1 50 Factory supplies 0 20 Utilities 0 30 Sales commissions 0.90 Shipping expenses 0 40 Office supplies E Total variable costs Contribution margin $ 5.20 Fixed costs DepreciationMachinery $ 8,000 Supervisory salaries 11,000 Insurance expense 1,000 DepreciationOffice equipment 7,000 Administrative salaries ,M Total fixed costs $40,000 Income from operations Flexible Budget for Unit Sales of $100,000 $120,000 10,000 12,000 15,000 18,000 2,000 2,400 3,000 3,600 9,000 10,800 4,000 4,800 1% _6,M ,M i, $ 52,000 $ 62,400 8,000 8,000 11,000 11,000 1,000 1,000 7,000 7,000 13,000 13,M 40, 00 40% 12,000 $ 22,400 $140,000 14,000 21,000 2,800 4,200 12,600 5,600 _7,M i,M $ 72,800 8,000 1 1,000 1,000 7,000 J,M A,M $ 32,800