Required:Prepare a budget based on a level of activity of 50% which should show the contribution which can be expected.

Flexible budget example A company manufactures one product and is experiencing a current depression in the market. Currently it is operating at a normal level of activity of 70% which represents an output of 6300 units. However the sales director believes that a realistic forecast for the next budget period would be a level ofoactivity of 50%. Information: Direct materials Direct wages Production overhead Administration overhead Selling and distribution overhead Total cost 60% 37800 16200 37600 31500 42300 ----------165400 ===== 70% 44100 18900 41200 31500 44100 ----------179800 ===== 80% 50400 21600 44800 31500 45900 ----------194200 ===== Profit is 20% of selling price. Required: Prepare a budget based on a level of activity of 50% which should show the contribution which can be expected