The CEO of Central Industries has requested a forecast for next month's maintenance costs. Three possible levels of operations and potential cost drivers are as follows (all within the relevant range):

Refer to the information in Exercise 2.33. Data are available on the Wiley Web site at www.wiley.com/college/eldenburg.

A. If you have not already done so, perform a regression analysis using the most appropriate cost driver for estimating maintenance costs. Write the cost function.

B. Use the cost function from Part A to develop a flexible budget for the three possible levels of operations.

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Units of Output Direct Labor Hours Machine Setups 1,350 215 50 1,710 330 62 2,000 270 70 Actual Sales Direct materials Direct labor Variable overhead Fixed overhead Advertising Master Budget (100,000 units) $600,000 200,000 125,000 50,000 75,000 (115,000 units)Variance $21,000 (27,700) (13,000) (7,000) (200) 40.000 $46900 $621,000 227,700 138,000 57,000 75,200 Operating Income $130,000 S83,100