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Crane Corporations master (static) budget for the year is shown below: ...

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Accounting

Crane Corporations master (static) budget for the year is shown below:

Sales (60,000 units) $ 1,860,000
Cost of goods sold:
Direct materials $ 168,000
Direct labor 450,000
Overhead (variable overhead applied at 40% of direct labor cost) 240,000 858,000
Gross profit $ 1,002,000
Selling expenses:
Sales commissions (all variable) $ 167,400
Rent (all fixed) 40,000
Insurance (all fixed) 30,000
General expenses:
Salaries (all fixed) 92,000
Rent (all fixed) 77,000
Depreciation (all fixed) 50,000 456,400
Operating income $ 545,600

Required:
1.

During the year the company manufactured and sold 55,000 units of product. Prepare a flexible budget for this level of output.

2.

Now suppose, that the actual level of output was 65,000 units. Prepare a flexible budget for this level of output.

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