The Business Situation Armstrong Helmet Company manufactures a unique model of bicycle helmet. The company began operations December 1, 2013. Its accountant quit the second week of operations, and the company is searching for a replacement. The company has decided to test the knowledge and ability of all candidates interviewing for the position. Each candidate will be provided with the information below and then asked to prepare a series of reports, schedules, budgets, and recommendations based on that information. The information provided to cach candidate is as follows. Cash Flow Data Cash collections from customers: 75% in month of sale and 25% the following month. Cash payments to suppliers: 75% in month of purchase and 25% the following month. Income tax rate: 45%. Cost of proposed production equipment: $720,000. Manufacturing overhead and selling and administrative costs are paid as incurred. Desired ending cash balance: $30,000. 11. Prepare a fl exible budget for manufacturing costs for activity levels between 8,000 and 10,000 units, in 1,000-unit increments. 12. Identify one potential cause of direct materials, direct labor, and manufacturing overhead variances in the production of the helmet. ARMSTRONG HELMET COMPANY Monthly Flexible Manufacturing Costs Budget [XXX] \begin{tabular}{|l|l|l|l|} \hline Activity Level & & & \\ \hline Production in Units & 8,000 & 9,000 & 10,000 \\ \hline Variable Costs & & & \\ \hline[XXX] & {[XXX]} & & {[XXX]} \\ \hline[XXX] & {[XXX]} & & {[XXX]} \\ \hline[XXX] & {[XXX]} & & {[XXX]} \\ \hline Total Variable Costs & {[XXX]} & {[XXX]} & {[XXX]} \\ \hline Fixed Costs & {[XXX]} & {[XXX]} & {[XXX]} \\ \hline Total Costs & {[ XXX] } & {[ XXX] } & {[ XXX] } \\ \hline \end{tabular} Question Answer 12 [XXX]