Paragon Inc. normally manufactures between 36,000 and 42,000 units each month. A static budget based on 36,000 units and actual results for April follows:

Conversations with Paragon's accountant revealed the following information:
April's production totaled 35,000 units.
Supervision, insurance and taxes, and depreciation are fixed costs.
Should production fall below 36,000 units, supervision costs are expected to be reduced by $20,000 because of temporary layoffs.

Instructions
a. Prepare a flexible budget for 36,000, 39,000, and 42,000 units of activity.
b. Prepare a performance report for April that can be used to judge Paragon's success or failure in meeting budgeted targets. Comment on your findings.
c. Explain the flexibility that is associated with a flexiblebudget.

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Budget Direct materials Direct labor Variable factory overhead Actual S172,800 $175,900 258,000 109.000 82.600 61,500 88.000 S807,000 $775,000 270,000 115,200 05.000 60,000 84,000 upervision Insurance & taxe Depreciation