Prepare variance analysis based on the provided 2012 budget and the year-end trial balance Prepare variance analysis based on a flexible budget for actual sales volume Prepare analysis of potential product changes using relevant information to see if change should be made Eagle's Nest, Inc. Actual results for 2012 Sales were 9,000 units for 2012 at an average selling price of $ 500 Direct material costs were $1.99 per lb. and the total pounds used were 909,000 Direct labor costs were $ 15.05 per hour and the total number of direct labor hours was 40,050 Variable overhead per unit was at the budgeted level Fixed overhead was at the budgeted amount There were no changes between beginning and ending inventory in units Eagle's Nest, Inc. Budget 2012 Sales 5,000,000 2,000,000 675,000 101,250 100,000 168,750 25,000 395,000 Direct Materials Direct labor Payroll taxes (direct labor) Consumable supplies Benefits (direct labor) Miscellaneous Total variable overhead Production supervisor Payroll taxes (supervisor) Benefits (supervisor) Depreciation Utilities Total Fixed overhead 45,000 4,000 5,000 125,000 25,000 204,000 Gross Profit 1,726,000 Salaries Payroll taxes (salaries) Benefits (salaries) Computer costs Building maintenance Advertising Miscellaneous Total Selling, general & administrative 750,000 100,000 80,000 15,000 15,000 20,000 20,000 1,000,000 726,000 Operating Income (EBIT) Interest 75,000 Earning before taxes 651,000 Income taxes 260,400 390,600 Net Income Budgeted sales were based on sales of 10,000 units at $500 per unit. Direct materials were based on 100 lbs of material per unit at $ 2.00 per lb. Direct labor was based on 4.5 hours of labor at $ 15.00 per hour per unit. Payroll taxes on direct labor were based on 15% of labor Consumable supplies were based on best estimate (2% of sales) Benefits were based on 25% of direct labor (.5% of sales) Miscellaneous variable expenses were based on best estimate Supervisor's salary was set at $ 45,000 Benefits were estimated for supervisor at $ 5,000 per year Payroll taxes were estimated at $ 4,000 for supervisor Depreciation on building and production equipment was estimated at $ 125,000 per year Utilities were based on previous year adjusted for changes in production volume. Selling, general and administrative expenses Salaries were estimated at $ 750,000 for the year Payroll taxes were estimated at 100,000 for the year Benefits were estimated at $ 80,000 for the year Computer costs were estimated at $15,000 for the year Building maintenance was estimated at $ 15,000 for the year Advertising was budgeted at $20,000 for the year Miscellaneous expenses were estimated at $ 20,000 for the year The direct labor estimate requires 25 direct labor personnel. This is based on 10,000 units times 4.5 hours per unit for a total of 45,000 direct labor hours. The 45,000 are divided by the average of 1800 hours worked per person to arrive at 25 hourly production employees