Problem 2

Favor Company budgeted the following amounts:

Variable costs of production:
	Direct materials	5 pounds @ $2.00 per pound
	Direct labor	0.50 hours @ $20.00 per hour
	Variable overhead	0.50 hours @ $4.00 per hour

Fixed overhead:
	Materials handling	$9,000
	Rent	$2,300

Required:

Prepare a flexible budget for 1,500 units, 1,800 units and 2,100 units.