Gordon knits wool caps for sale at the local ski resorts. He prepared the following budget for the production and sale of 150 wool caps. Unfortunately, Gordon fell ill with a bad case of the flu and was able to make and sell only 125 wool caps.
Sales revenue ........ $1,500.00
Variable costs:
Direct materials (yarn) ..... 375.00
Direct labor ........... 750.00
Commission to resort ..... 112.50
Fixed costs ......... 75.00
Net income ......... $187.50

Required
Prepare a flexible budget for Gordon based on the production and sale of 125 wool caps.