The Current Designs staff has prepared the annual manufacturing budget for the rotomoulded line based on an estimated annual production of 4,000 kayaks during 2016. Each kayak will require 54 kilograms of polyethylene powder and a finishing kit (rope, seat, hard- ware, etc.). The polyethylene powder used in these kayaks costs $1.50 per kilogram, and the finishing kits cost $170 each. Each kayak will use two kinds of labour-2 hours of type I labour from people who run the oven and trim the plastic, and 3 hours of work from type II workers who attach the hatches and seat and other hardware. The type I employees are paid $15 per hour, and the type II are paid $12 per hour.
Manufacturing overhead is budgeted at $396,000 for 2016, broken down as follows.

During the first quarter, ended March 31, 2016, 1,050 units were actually produced with the following costs.

Instructions
(a) Prepare the annual manufacturing budget for 2016, assuming that 4,000 kayaks will be produced.
(b) Prepare the flexible budget for manufacturing for the quarter ended March 31, 2016. Assume activity levels of 900, 1,000, and 1,050 units.
(c) Assuming the rotomoulded line is treated as a profit centre, prepare a flexible budget report for manufacturing for the quarter ended March 31, 2016, when 1,050 units were produced.

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Variable costs Indirect materials Manufacturing supplies Maintenance and utilities $40,000 53,800 88,000 181,800 Fixed costs Supervision Insurance Depreciation 90,000 14,400 109,800 214,200 S396,000 Total Polyethylene powder Finishing kits Type I labour Type II labour Indirect materials Manufacturing supplies Maintenance and utilities Supervision Insurance Depreciation 87,000 178,840 31,500 39,060 10,500 14,150 26,000 20,000 3,600 27,450 $438,100 Total