Tolono Company's 2008 master budget included the following fixed budget report. It is based on an expected production and sales volume of 20,000 units. Problem 24-2B Preparation and analysis of a flexible budget I M TOHONO COMPANY Fixed Budget Report Year Ended December 31, 2008 $3,000,000 $1,200,000 260.000 57,000 250,000 200,000 140,000 2.107.000 893.000 Sales .... Cost of goods sold Direct materials.. . Direct labor Machinery repairs (variable cost) Depreciation Machinery Utilities (25% is variabla cost)... Plant manager salaries Gross profit . . ......... Selling expenses Packaging Shipping . ........... Sales salary fixed annual amount) General and administrative expenses Advertising Salaries Entertainment expense.... Income from operations . 00.000 116.000 160.000 356,000 81.000 241 000 90,000 412.000 $ 125.000 Chapter 24 Flexible Budgets and Standard Costa 999 Required 1. Classify all items listed in the fixed budget as variable or fixed. Also determine their amounts per unit or their amounts for the year, as appropriate. 2. Prepare flexible budgets (see Exhibit 24.3) for the company at sales volumes of 18,000 and 24,000 Check (2) Budgeted come at 2400) elis, 372.400 3. The company's business conditions are improving. One possible result is a sales volume of approximately 28,000 units. The company president is confident that this volume is within the rele- vant range of existing capacity. How much would operating income i se over the 2008 budgeted amount of $125,000 if this level is reached without increasing capacity? 4. An unfavorable change in business is remotely possible; in this case, production and sales volume 4) Pocential aparating to for 2008 could fall to 14,000 units. How much income (or Joss) from operations would occur if sales $246.100) volare falls to this level