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

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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

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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