Helium Industries manufactures glitter balloons used as party accessories. The balloons are bagged in packages of 100 and sold for $20 per pack. The company incurs fixed manufacturing overhead of $25 000 per year and the fixed overhead is applied based on packs produced. Standard costs are: material $8 per pack, direct labour $5 per pack and variable overhead $3 per pack. The marketing manager believes sales for the coming year will be somewhere between 10 000 and 15 000 packs. 

Required

(a) Prepare a flexible budget for sales of 10 000, 12 000 and 15 000. (Allocate fixed overhead based on the sales volume.)

(b) What advantages are there for Helium Industries in using a flexible budget?